Labour manifesto 2019: Genuinely self-employed exempted from new worker status proposal

A new employment status ‘for everyone apart from individuals who are in business on their own account’ is Labour’s most relevant 2019 manifesto pledge for the contractor sector.

The party’s proposal is reminiscent of the ‘dependent contractor’ category and the Freelancer Limited Company proposal because, like those, it involves creating a fresh status of worker.

Similar to these two now-dropped models (tabled by the Taylor Review and IPSE respectively), Labour’s single, yet all-encompassing worker status is not ignorant of IR35.

In fact, taking words straight from IR35 case law, the party says the new status would apply to all workers except people “genuinely self-employed in business on their own account.”

'Still need clarity on IR35'

But if Labour’s proposal in its ‘Real Change’ manifesto for a new worker status is meant to solve IR35’s complexity, it needs to be made much clearer, implies Gorilla Accounting.

Indeed, after reading the party’s proposals, the firm said the contractor sector “still need[s] further clarity” on IR35 from Labour, if the ‘uncertainty paralysing’ independent working is to be resolved.

The Federation of Small Businesses (FSB) is another organisation serving tiny traders whose response to the Labour manifesto indicates it does not see its status proposal as an IR35 solution.

In the wake of the Lib Dem vow to review April 2020’s IR35 regime, for example, the FSB embraced it, saying a “wholesale delay” should be a Jo Swinson-led government’s “starting point.”

'Light on detail'

By contrast, the federation has made no mention of Labour’s worker-status plan, only saying it needs to “see more details around how the party would tackle [small companies’] biggest challenges”.

“We look forward to the launch of Labour’s small business manifesto in the days ahead,” said the FSB’s Mike Cherry.

“The [party's manifesto] cast-iron commitments to end the late payment crisis and ban late payers from public procurement are critical, but light on detail.”  

The Freelancer & Contractor Services (FCSA) is more inclined to see Labour’s worker-status proposal as targeting disguised employment.

“[We welcome the party’s] promise to protect the UK workforce…[with] its pledge to end bogus self-employment and create a single status of worker for everyone apart from those genuinely self-employed in business on their own account.  

“Employment status is complex,” the FCSA also said. “[And] with the gig economy on the rise, it is important that policymakers act to protect the vulnerable and precarious whilst not unfairly penalising genuinely self-employed people who are important contributors to the UK economy.”

'Helps workers thrive'

Agency staffing body the Recruitment & Employment Confederation (REC) agrees that Labour’s potential attempt to deal with status issues must be deft.

“It is important that the next government creates a regulatory environment that helps workers to thrive, [but] it must also protect one of our labour market’s greatest strengths – its two-way flexibility.

The confederation, which like the FSB wants private sector IR35 reform delayed. added: “Many people actively choose temporary work, freelancing or contracting over a permanent job.

“[So] any changes to rights and regulations around temporary workers must also keep our jobs market agile for both employers and workers.”

'More flexibility'

The REC’s Tom Hadley was more unreserved in backing another potentially contractor-centric commitment in the Labour manifesto – to broaden the Apprenticeship Levv, and make it more small-business friendly by increasing the amount that can be transferred to non-levy paying employers to 50%.

“We welcome the proposal… [and support] allowing more flexibility for business,” he said. “We hope it will allow levy money to be spent on training temporary workers.”

In 2017, the REC, the FCSA and other contractor trade bodies were aghast at Labour leader Jeremy Corbyn’s plan to ban umbrella companies. Fortunately for them and many others, in 2019, it no longer appears to be a Labour manifesto pledge.

However, included in the party’s 2019 manifesto, are the following commitments which have potential implications for contractors, or may impact contracting or independent work:

  • Develop collective income-protection insurance schemes for the self-employed.
  • Seek to widen and expand access to pension auto enrolment schemes for more low-income and self-employed workers.
  • Hand up to 10% of company ownership to employees, with dividend payments distributed equally among all, capped at £500 a year.
  • Establish a Ministry for Employment Rights, responsible for giving everyone full rights from day one on the job.
  • Ban overseas-only recruitment practices.
  • Tackle late payment, including banning late payers from public procurement.
  • Introduce a legal right to collective consultation on the implementation of new technology in workplaces.
  • Ban zero-hour contracts (and give people working 12+ hours the right to a regular contract specifying those hours).
  • Give all workers the right to flexible working.
  • Extend statutory maternity pay from nine to 12 months.
  • Double paternity leave from two weeks to four.
  • Increase statutory paternity pay.
  • Force employers to come up with and put in place plans to “eradicate” the gender pay gap, and fine those who don’t.
  • Ban unpaid internships.
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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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