Empowering the Freelance Economy

Labour Party proposals: will they help or hinder contractors and freelancers?

Photo source: https://members.parliament.uk/member/4356/portrait
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At the onset, the Labour Party’s new spree of proposals impacting the world of work is promising. For one, the Party takes the realities of everyday people seriously, like juggling school hours with working hours and the cost of living. Who wouldn’t like to make more if they were on minimum wage?

That said, could the Labour Party’s “single worker status” proposal be counterproductive to freelancers and add salt to the wounds already inflicted by IR35? Contractor specialists aren’t so convinced some of the proposals will deliver for the benefit of freelancers. Read why.

Labour policies calling for flexible working

In the UK there are now a total of 605,000 solo self-employed mothers, just over half of whom are working in SOC1 to SOC3 occupations. This means that one in seven of all solo self-employed people are now working mothers
(Source: IPSE)
  • The right to flexible working for all workers as a default from day one of employment and an accompanying duty on employers to accommodate this where there is no reason a job cannot be done flexible and remotely
  • The right to flexible working to include: flexible hours (‘flexi-time’), compressed hours, staggered hours, annualised hours, and flexibility around school runs and other family and caring responsibilities, including childcare during school holidays
  • Ending one-sided flexibility so all workers have stable, secure employment and mutually-agreed predictable working hours and shift patterns so they can plan their lives
  • The ‘right to switch off’ and disconnect from work at home outside of working hours
  • Greater access to workplaces, including to home workers, for trade unions to ensure fair flexibility for all is delivered through a collective voice for all staff, including those who are working flexibly or remotely
  • The party also hopes to bring the minimum wage up to at least £10 an hour alongside a guarantee of work or training for young people and a buy-British approach, intended to use government procurement to support jobs on the homefront

“Flexible working is not just about working from home, it is about a fundamental change to working practices to improve the lives of all working people. Flexible working means work fitting around people’s lives, not dictating their lives,” said Labour’s Deputy Leader and Shadow Secretary of State for the Future of Work Angela Rayner.

“Labour will make flexible working a force for good so that everyone is able to enjoy the benefits of flexible working, from a better work-life balance to less time commuting and more time with their family.

“The right to flexible working will change our economy and the world of work for the better, stop women losing out at work or even dropping out of the workforce altogether, end the sexist assumption of Dad being at work in the office and Mum looking after the kids at home and improve the lives of millions of workers.”

Angela Rayner, Labour Deputy Leader and Shadow Secretary of State for the Future of Work


Single worker status: good or bad for limited company freelancers?

Labour’s plans to give all workers security at work by creating a single status of ‘worker’ for all but the genuinely self-employed, with rights from day one of employment.

A single status of ‘worker’ would replace the three existing employment categories and remove qualifying periods for basic rights and protections to give workers day one rights in the job.

As part of Labour’s plan to end insecure employment, all workers would receive rights and protections including Statutory Sick Pay, National Minimum Wage entitlement, holiday pay, paid parental leave, and protection against unfair dismissal.

However, Labour’s proposal for a single ‘worker’ status could make things even more complicated for agency-hired freelancers that go through their own limited company.

Contractors would effectively be paying the umbrella company to get protections that the Labour party proposals say they should be getting for free. IR35 has already made employability more difficult due to blanket contractor bans and overly complicated mortgage affordability protocols for each lender.

Alongside Labour’s commitment to extend Statutory Sick Pay to the self-employed, this would make 6.1 million additional working people eligible to claim Statutory Sick Pay. The Labour party cited ONS figures, which suggest 4.2 million self-employed workers, including gig economy workers, do not currently qualify for Statutory Sick Pay, alongside 1.9 million people who are currently employed but cannot claim it.

  • To do this, will some form of taxes have to be raised? Will corporate NI rates go up?
  • Will umbrella company contractors end up absorbing the tax hikes?

➡️ Read our report on the latest policies for SSP for contractors and freelancers here.

The single worker proposal follows a number of key legal cases on the gig economy where the central dispute was whether the claimant was a worker, and thus entitled to the minimum wage and holiday pay, or self-employed.

“Millions of workers are in insecure employment with low pay and few rights and protections, particularly key workers whose efforts got the country through the pandemic,” said Andy McDonald MP, Labour’s Shadow Employment Rights and Protections Secretary.

“A lack of basic rights and protections forces working people into poverty and insecurity. This is terrible for working people, damaging for the economy, and as we have seen throughout the pandemic, devastating for public health.

“We need a new deal for working people. Labour would ensure that all work balances the flexibility workers want with the security they deserve,” said McDonald.

Qdos CEO, Seb Maley, believes on the face of it, granting vulnerable workers employment rights from day one would be a smart, sensible move.

“But proposals like this require careful thought and I urge caution. First and foremost, they must not impair the genuinely self-employed, most of whom do not want employment rights. These people want to retain the freedom that comes with working independently.

“Secondly, the potential tax implications need to be made clear. Right now, many gig economy workers, for example, are classed as ‘workers’ but still pay tax as a self-employed person. How this would work if Labour’s proposals materialised remains to be seen and could have major implications, not just for the individual but the companies that engage them.”

Seb Maley, CEO Qdos

Admirable, but a lawsuit waiting to happen?

The Labour proposals are admirable, according to Dave Chaplin, CEO of contracting authority, ContractorCalculator. Chaplin believes they could finally put a stop to the zero-rights employment models that have emerged in the flexible workforce which are facilitated by what he describes as “quasi-employment models designed to circumvent the need of corporations to give workers their deserved rights.”

“At the lower end of the pay scale, vulnerable workers have little, if any, bargaining power and are given a Hobsons choice to either accept poor working conditions with few rights or get no work at all. This has to stop,” said Chaplin.

However, he can see where the single worker status could impinge on pure self-employment and in some cases create potential lawsuits for those that see the opportunity.

“We must also protect both parties in situations where they have entered into a relationship of self-employment in good faith. Neither should be able to change their mind later causing costly litigation,” said Chaplin.

“Also, the taxman’s IR35 legislation should be abolished to remove the uncertainty in the sector which is currently causing mayhem in the market, and pushing workers into unregulated tax avoidance schemes.

“Governments have been consulting on this topic for a decade, and nothing has yet changed. This is a bold and ambitious policy by Labour, who will first need to get into power. We could be a decade away from changes,” he said.

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