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The Taylor Review and IT contractors
by Susie Hughes at 10:38 28/11/18 (News on Business)
The Government’s response to the Taylor Review of Modern Working Practices gained a mixed reception when it was published earlier this year.
Karen Field, CEO of Microsoft recruitment partner, Curo Talent, has her thoughts on the review and its findings, voicing her concerns for the IT contracting community. She writes:

Just the beginning
Good Work, Matthew Taylor’s review of modern working practices, made recommendations that, if implemented, could make a significant difference to those working in the so-called ‘gig economy’. Since its publication, the Government published its own much-anticipated follow-up, focusing on employment law for flexible workers.

However, the response has been criticised for failing to address major issues in the modern workplace. For example, the headline recommendation to re-classify workers as dependent contractors seems to have been kicked into the long grass with ‘further consultation’ required. Additional consultation is also the answer to questions about sick pay and paid holidays for workers.

There has also been some criticism that recommendations made in the Taylor Review in July 2017 seem to have been superseded or duplicated in the Improving Lives report (November 2017) and the Industrial Strategy report (December 2017).

In fact, Matthew Taylor, the leader of the independent review, gave the response a four out of 10 rating based on its contents. Mr Taylor said the Government had at least acknowledged there should be limits to flexibility in working arrangements but said more needed to be done.

Despite this criticism, any reform that removes the abhorrent practices of ‘bad’ employers exploiting vulnerable members of our flexible workforce is well received.

Another positive was the acknowledgement of outdated employment laws, some of which are unable to support the emerging new business models and working patterns. This has particular pertinence to the IT contractor community, where many freelancers choose a lifestyle that doesn’t match secure nine-to-five schedules.

Employment status
One area of interest for the IT contracting community is employment status. Britain’s flexible labour market and its different employment status models should be celebrated. From part-time employed to self-employed freelancer, there’s a huge range of options. The variety encourages entrepreneurship and job creation, making it fundamental to the growth of our economy. Of course, getting the balance between flexibility and job security is key.

Looking to the hospitality market, McDonald’s has been piloting the option for guaranteed hours for staff at 23 restaurants. As reported, 80 per cent of staff chose to remain on zero-hour contracts, while only 20 per cent opted for a fixed number of ‘guaranteed’ hours. It says a lot about what individuals actually want.

Similarly, IT contractors often value flexibility over employee benefits. A survey by Contractor Calculator revealed that 80 per cent of self-employed workers do not want any workplace benefits whatsoever. The overwhelming signal from the study was that freelancers value their own independence over workplace benefits. This begs the question — are IT contractors getting caught in a clean-up they didn’t demand?

Perhaps a better solution would be a greater synergy between employment status and tax. The Taylor Review proposes three different types of employment; employee, dependent contractor and self-employed. Yet, the UK tax system has only two categories; employee and self-employed. Merely reclassifying workers as 'dependent contractors' does not solve the problem.

With the rise of the gig economy, the courts are increasingly seeking to clarify the employment status for individuals carrying out work on a short-term, job-by-job basis. It is meaningful clarification we need, rather than meaningless re-classification.

There needs to be a clear understanding that the tax and work benefits of a gig economy delivery driver are different from a senior IT contractor.

The Confederation of British Industry (CBI) summed it up well in their response; “evidence-based debates and solutions are needed instead of demonising different forms of working for ideological reasons”.

At Curo Talent, we agree it is a complicated subject matter made more complex by the reactive implementation of legislation, from which each successive Government cannot disentangle itself. We see the effects this has on the IT contracting community, particularly with threats to tax breaks.

Money matters
The debate focuses on whether the impetus for this review is to protect gig economy workers, or reduce the fiscal gap created by rising numbers of self-employed workers. The Treasury believes the increase in self-employment costs £3 billion a year in lost revenue under the current tax system.

Curo Talent supports the tax advantage freelancers receive; it’s a trade-off for less secure employment and unpaid holidays or sick pay.

Do I trust the Government to tackle the employment status issue, while retaining the flexibility that many people find so valuable? Sadly, no. While cynical, I believe the main driver will always be the Treasury’s concerns that increasing self-employment is reducing tax revenue.

Moving forward, I hope to see a stronger clarification of employment status, which doesn’t take away from the flexibility that benefits both IT contractors and employees. Most importantly, it will require synchronising employment status and tax for freelancers — which will be a disruptive but necessary process in making sure IT and other highly skilled contractors are treated fairly.

Article by Karen Field, CEO of Microsoft recruitment partner Curo Talent.

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Susie Hughes © Shout99 2018

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