In brief

On 26 July 2022, the UK Government published its responses to the 2018 consultation on employment status. The consultation had invited stakeholders to make online submissions on how to address various issues with the UK’s current framework for the employment and tax statuses of individuals. At present, for tax purposes, there are two tax statuses: (i) self-employed and (ii) employed; while for employment law purposes there are effectively three statuses: (i) worker; (ii) employee and (iii) self-employed.

These issues were first raised in Matthew Taylor’s review, titled “Good work: the Taylor review of modern working practices”, which was published in 2017 (“Taylor Review“). The Government confirmed that it would not undertake any material reforms in response to the Taylor Review online consultation and the submissions made by stakeholders.
 

Comments

Following the proposals and feedback received during the consultation exercise, the Government has responded as follows:

1. The response identified the following three main concerns with the current employment status framework raised by the Taylor Review and stakeholder submissions, namely: 
   • “Open to Interpretation” – there is ambiguity in the framework and the application of case law to individual circumstances; 
   • “Complexity” – the status determination process is overly complex; and 
   • “Difficulties Resolving Disputes” – the difficulties for individuals and businesses in resolving disagreements on statuses and the costs associated with seeking a final determination. 
2. Overall, the Government acknowledged that reform is required in this area but that the consultation did not produce any clear-cut solutions and that there is no overall consensus on what changes need to be implemented.
3. Despite the interpretive difficulties between employment statuses, the employment status framework will not be reformed given the associated legislative disruption that this would cause in the interim. 
4. Alignment between the tax and employment frameworks will not be undertaken for the time-being since proposals from stakeholders and viable long-term options still need to be carefully considered.
5. In an effort to alleviate some confusion regarding the determination of an individual’s status and to clarify the application of case law, the Government has published some employment status guidance (see link below).

For more information about the outcome of the consultation, please reach out to a member of the Employee Benefits team.

To view the Government’s published consultation response please use the link below:

Employment status – GOV.UK (www.gov.uk)

For the further guidance published by the Government on issues of employment status in addition to its official consultation response, please use the links below: 

• Employment status and employment rights: guidance for HR professionals, legal professionals and other groups – GOV.UK (www.gov.uk)
• Employment status and rights: support for individuals – GOV.UK (www.gov.uk) 
• Employment status and rights: checklist for employers and other engagers – GOV.UK (www.gov.uk)

For further Government responses published in respect of other Taylor Review consultation exercises, please use the link below:

Government response to the Taylor review of modern working practices – GOV.UK (www.gov.uk)