The UK’s changing labour market and the relationship between employer and employee is causing confusion and may be affecting people’s employment opportunities, according to Lee Hamilton, a partner at accounting, tax and advisory practice Blick Rothenberg.
Mr Hamilton said: “The changing labour market, the way people wish to work, the current disparity between employment law and tax law and the complexity of these rules is causing confusion for both employers and employees. The differences between the tax rules and NIC rules add an extra dimension to the confusion.”
Mr Hamilton believes that the problem is that thousands of companies, and potential employees, “just don't know how they stand in terms of their employment obligations and rights and the tax that they will have to pay on their earnings.”
He gives the example of Uber where, in late 2017, the Employment Appeal Tribunal upheld the view of an earlier tribunal that drivers should be considered as workers giving them certain statutory rights such as the right to a minimum wage and holiday pay.
Mr Hamilton explained that the “law is not clear when it comes to an individual’s employment status,” as seen in the Uber case that the definition of worker means that the individuals are neither employed nor self-employed for employment law purposes and may or may not be self-employed for employment tax purposes.
He warns that the situation is not getting any better because of the changing labour market which now includes “gig” economy workers, platform workers, those who want to work on short term contracts, those who wished to work as self-employed, contractors and zero-hour contracts.
To improve this situatuion and "provide clarity to both employers and employees, the UK Government needs to better align the rules for employment law and employment tax and should make them much simpler. This is essential to maintaining a flexible and compliant labour market and avoiding many years of time consuming and costly litigation,” Mr Hamilton added.
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