UK Trends and Developments Contributed by: James Ross and Helen Farr, Taylor Wessing LLP
Taylor Wessing LLP 5 New Street Square London EC4A 3TW UK Tel: +44 20 7300 7000 Fax: +44 20 7300 7100 Email: london@taylorwessing.com Web: www.taylorwessing.com
The last year has seen a change in the political complexion of the government in the UK – the first such change for 14 years. The new Labour government has not signalled any intention to reshape the UK economy in a radical way, but an early priority is an overhaul of employment rights legislation, which is currently being considered by Parliament. While these changes are poten - tially far-reaching, they will not touch on the most fundamental question in this area, namely the question of employment status – whether an individual is employed or self-employed. In the UK, employment status has largely been a question for the courts to determine based on an analysis of all relevant factors. In recent years, however, the rise of new ways of working, out - sourcing and the “gig” economy have blurred the lines between employment, self-employment and the intermediate ”worker” status that pro - vides certain employment law protections for qualifying individuals. The increased litigation in this area reflects the fact that these distinctions are increasingly hard to apply with clarity, but also the fact that the distinctions have real con - sequences. Employees (and, to a lesser extent, workers) have statutory protections that self- employed individuals do not, and self-employed individuals are treated somewhat more favour-
ably for tax purposes than employees – particu - larly from the perspective of the person engag - ing them. Changes being introduced by the recently elected Labour government (both in the employment and tax law fields) are expected to exacerbate this disparity, meaning that there is likely to be continuing litigation on this subject. Employment Status – The Employment Law Position Traditionally, there has been a fairly binary dis - tinction between employing staff (regarded as the costly and more administratively burdensome option) and engaging workers, either directly or through an employment agency or a profession - al employer organisation. Employment agencies, umbrella companies and professional employer organisations have grown because of the desire of many employers to avoid risk and cost. However, case law over the past few years has been eroding this distinction. Employment tri - bunals and appellate courts have been increas - ingly robust in scrutinising the label the parties put on the arrangement and weighing the fac - tors that point away or towards employment, namely control, substitution and the mutuality of obligation between the parties. The net effect of the growing case law is that employers have
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