Recruiters have been urged to review their practices to ensure individuals are not being misclassified as self-employed.
The warning comes from employment lawyers after it emerged HM Revenues&Customs is launching a specialist unit to investigate firms suspected of withholding employment protection from workers, 通过 using 机构 staff or calling them self-employed.
The move was confirmed last week in a letter from financial secretary to the Treasury, Jane Ellison, to Labour MP Frank Field, published on Field’s website.
Christopher Tutton, partner at law firm Constantine Law, told Recruiter that given the 政府’s move, agencies should review their practices now to ensure that workers and employees are receiving their statutory rights, particularly around the national minimum wage and holiday pay.
“The implications of failing to do so could be HMRC investigations and fines, class action litigation from workers on their books and significant reputational damage,” Tutton said.
He explained that a key feature of the ‘gig economy’ is its use of self-employed workers who do not benefit from national minimum wage protection, holiday pay and a host of other rights.
In his view, this has led to public concern in relation to whether employment rights are being eroded. “We are seeing litigation against gig economy employers as well as a 政府 review into modern working practices in the gig economy.
“The 政府 has cracked down on the 税 implication of false self-employment in the last few years, 通过 requiring agencies to treat 机构 staff as employees for 税 purposes.
“However, the false self-employment rules did not mean that 机构 workers were treated as employees for the purposes of employment law protection.”
He said the 政府 review into the gig economy was “much needed as employment law must keep pace with the modern world of work and strike the right balance between protecting rights and encouraging economic growth and enabling people to work flexibly.”
Meanwhile, Dr Sybille Steiner, partner solicitor at law firm Irwin Mitchell, said the 政府’s move signifies its determination to crack down on misclassified employees, as well as a commitment to take all necessary steps to ensure that companies pay the appropriate 税, national insurance contributions, interest and penalties.
“Details of the potential penalties have not yet been released… however, in order to avoid potential liability, 招募 agencies should be aware of the changes and ensure that individuals are not being misclassified as self-employed,” she said.
“Cases such as the recent 优步法庭案 have highlighted the potential arguments which may emerge if companies are found to be encouraging false self-employment and have shown the potential ramifications in terms of claims for benefits such as minimum wage, sick pay, holiday pay and pensions.
“For this reason, it is important for 招募 agencies to continually monitor the classification of employees and remember that employment status in the UK is determined 通过 the reality of the working relationship, not simply 通过 the terms written in the contract.”
Commenting on the launch of the new unit, Julia Kermode, chief executive of The Freelancer&Contractor Services Association, revealed she has already set up Ellison MP, adding she looks forward to discussing the issues with her and hearing more about the role and objectives of the unit.