Empowering the Freelance Economy

Will Self-Employed Parents Be Better Off Now That Labour is in Power?

General Election campaigning, East Kilbride, Scotland, United Kingdom - 03 July 2024 Keir Starmer; visit to the Caledonian Gladiators Stadium in East Kilbride, while on the Picture date: July 03, 2024 Source: Keir Starmer Flicker
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Labour has positioned itself as the “party of the self-employed”. Yet, will the party now settling into No. 10 get it right this time when it comes to worker status and family-friendly rights for the self-employed?

Labour says in black and white in its paper Labour’s Plan to Make Work Pay: Delivering A New Deal for Working People, that it is the “party of the self-employed”. It promises in that very same report that its members recognise the “significant contribution to the UK economy” that the self-employed make and the next Labour government will “support and champion them”.

The Party also promises to strengthen rights and protections to help self-employed workers so that they can “thrive in good quality self-employment”, including the right to a written contract, which for example would benefit freelancers, action to tackle late payments, and by extending health and safety and blacklisting protections to self-employed workers.

The Labour Party’s proposal for a single-status worker aims to significantly enhance the protections and rights of freelancers. While the policy promises to offer greater security and support, it also brings potential challenges in the form of increased bureaucracy and costs. However, it has been suggested that the policies will likely get “watered down” once Labour is in power and sees stumbling blocks, especially from Labour campaign backing hiring companies.

Law firm Norton Rose Fulbright explains in a blog that at the time of writing, the UK recognises three employment status categories: “employee,” “worker,” and “self-employed contractor.” The rights and protections an individual receives are contingent on their employment status, with employees enjoying the broadest range of rights.

However, as the Labour Party notes, “many workers do not have a clear picture of ‘where they sit’.” This confusion stems from legal tests in case law, further complicated by new forms of working and technologies. To address this, the Labour Party proposes the creation of a single status of “worker” for all, except those genuinely self-employed.

Since the Green Paper, there has been some softening in the approach, according to the law firm. The Labour Party now suggests entering into a consultation on this change. According to the blog, establishing a single-worker status will significantly affect the rights available to individuals, increasing the number entitled to minimum rights. This shift could have substantial cost implications and impose additional administrative burdens on employers. Employers need to prepare by auditing their workforce in advance, as this change may result in many currently taxed under self-employment rules being subject to PAYE.

Promised Improvements for Freelancers

Labour aims to strengthen rights and protections for the self-employed, ensuring they can thrive in high-quality self-employment. Key proposals include:

  • Right to a Written Contract: Beneficial for freelancers, this ensures clarity and security in work agreements
  • Tackling Late Payments: Measures to ensure timely payment for services rendered.
  • Extending Health and Safety Protections: Ensuring self-employed workers have the same protections as traditional employees
  • Blacklisting Protections: Safeguarding self-employed workers from unfair exclusion from work opportunities

The Labour Party’s proposal for a single-status worker is designed to enhance protections and rights for freelancers. However, this policy also presents potential challenges.

Potential Drawbacks for Freelancers

  • Increased Bureaucracy: Requirements for written contracts and adherence to health and safety regulations could add to the paperwork and administrative tasks for freelancers.
  • Higher Costs for Employers: With increased protections, employers might face higher costs, potentially reducing freelance opportunities as companies might prefer traditional employees. They may also opt for all temporary or self-employed workers to work “inside IR35” and be forced to join an umbrella company, which means more costs and less pay for the worker
  • Loss of Flexibility: Stricter regulations could limit the flexibility that attracts many to freelance work, imposing more structured working conditions.

The Role of Trade Unions

Labour plans to strengthen trade union rights, which it claims will benefit self-employed workers. Trade unions can offer support such as legal advice, advocacy, training, and resources. However, some commentators warn that these measures could inadvertently hinder the truly self-employed by introducing excessive regulation.

Nicola Smith, head of economics at the Trades Union Congress, told the Financial Times that “it is time to scrap the ‘unorthodox assumption’ that a flexible market is a goal to aim for.” However, Dave Chaplin, CEO of contractor services company ContractorCalculator, warns this type of talk can actually backfire when it comes to those who wish to be self-employed.

“Rachel Reeves needs to navigate the longstanding tug-o-war between the unions, who think everyone is vulnerable and should be an employee, and businesses and the self-employed who wish to engage on a non-employed basis, says Dave Chaplin, CEO of Contractor Calculator.

He adds:

“Ensuring workers who should be employees is important but equally important is not putting in rules that impede the rights of individuals to be their own boss and for firms to hire them on that basis. These people are not victims, have not been pressured into working the way they do, and both they and their clients have entered into commercial contracts in good faith, which politicians or the taxman should not then curtail.”

Dave Chaplin, CEO Contractor Calculator

Notable Trade Unions for the Self-Employed in the UK:

  • The Association of Independent Professionals and the Self-Employed (IPSE): Represents freelancers, contractors, and consultants.
  • The Freelance Workers’ Union (FWU): Provides support and advocacy for freelance workers across various industries.
  • Community Union: Offers membership to self-employed individuals, providing support and advice.
  • The Musicians’ Union (MU), Equity, The Writers’ Guild of Great Britain (WGGB), and The National Union of Journalists (NUJ): Represent self-employed professionals in specific fields, offering various forms of support.
  • The British Institute of Professional Photography (BIPP) and the British Association of Journalists (BAJ): Support freelance photographers and journalists, respectively.

Don’t Forget the Dads: Balancing Family-Friendly Rights

Labour’s policies also emphasise family-friendly rights, recognising their importance for productivity, morale, and retention. The aim is to improve work-life balance through measures like flexible hours and remote working options, potentially enhancing well being and productivity.

“The New Deal for Working People Green Paper, which was released before the election, mentioned some new rights which would help parents, e.g. maternity rights but they were not repeated in the manifesto,” notes Rebecca Seeley Harris, and independent employment status, off-payroll and IR35 expert.

“I think it’s still a bit early but, as I understand it Labour will be looking at rights for the self-employed generally,” she says.

With much still left to be announced officially by the new Labour Cabinet, some self-employed parents are sceptical about seeing substantial changes without a stronger voice in Parliament. Frankie Tortora, the founder of Doing It For The Kids, an online (and increasingly offline) community for freelance parents, tells The Freelance Informer,

I hope the new government will be looking at the current provision for self-employed parents which is, frankly, in urgent need of review.

In particular the lack of paternity pay for Dads who are sole traders, the lack of adoption pay, bringing the existing Maternity Allowance scheme in line with SMP at the very least, and better access to Shared Parental Leave.

Labour has stated that it will review parental leave within the first year after the election. This would include shared parental leave. Parental leave will also become a day-one right for workers. Perhaps more telling is the proposed policy to make it “unlawful to dismiss a woman who is pregnant for six months after her return to work, except in specific circumstances.” (Norton Rose Fulbright). 

Self-employed and sick pay: don’t expect much if anything

The Labour government, however, may not fulfil its plans to enhance statutory sick pay by making it accessible to all workers, regardless of their earnings, and by eliminating the current three-day waiting period. It could be improved potentially or at first for just lower paid workers. Under the single-worker status policy, these improved conditions are unlikely to be extended to the “genuinely self-employed”.

Here’s perhaps why. In a Labour List report published last September, it was stated, that the final NPF document does not explicitly say Labour will raise sick pay or extend it to the self-employed:

It states that a Labour government would “strengthen statutory sick pay, remove the lower earnings limit to make it available to all workers and remove the waiting period”.

Party sources said the policies were practical, proportionate and remained transformative for low-paid workers.

They highlighted the fact sick pay had risen since Labour’s green paper, and suggested self-employed workers’ differences to employees meant a different, likely voluntary scheme would be needed.

The Road Ahead

The ultimate impact of Labour’s policies on freelancers will depend on balancing benefits and drawbacks, and how effectively these policies are implemented to meet the diverse needs of the freelance workforce. Labour’s plans hold promise, but careful navigation will be crucial to ensure that the new regulations support, rather than hinder, the self-employed community.

In a nutshell, hope for the best but prepare to not get everything you thought you would under a Labour government. But pushing for a representative in Parliament is something millions of self-employed people should push for. Our families depend on us. The economy depends on us and they both deserve better.

1 Comment
  1. Sam A says

    I think you’ve properly summarised the gist of the problem at hand and Labours view which is no view at all.

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