Nick Willis: Employers need to join the debate on employment status to avoid potential penalties


The government’s response to the Taylor Review of Modern Working Practices was issued on 7 February 2018, comprising of four separate consultation papers on workers’ rights. An immediate reaction is to think that we have a very long way to go before some very basic questions on employment status are resolved. While it seems clear that the three categories; employee, worker and self-employed will remain, a lot of work needs to be done on clarifying exactly who falls into which category. There is a lot of discussion, and many options put forward, around the best way of defining employee and worker status.

It would be unwise for employers to ignore this seemingly arcane debate, or to think that the issue is of concern only to organisations in the gig economy. When the new rules are implemented in one shape or another, the cost of getting the question of status wrong will become much higher.

This is because the government’s response focuses on how employee and worker rights can be enforced more easily in the future, and a number of recommendations will be considered. It will be made easier for individuals to bring claims and aggravated penalties will be levied if an employer has previously lost a tribunal case on comparable facts.

The options being discussed also involve government-led methods of enforcement. These include naming and shaming employers who fail to pay employment tribunal awards, and having the state, perhaps HM Revenue and Customs (HMRC), enforcing core rights such as holiday pay. This would be the same as HMRC’s current role in enforcing the national minimum wage where there has been a huge increase in activity over the past couple of years.

Any organisation with significant numbers of contingent or off-payroll workers will be caught by the new rules and enforcement regime, so it is important that businesses get involved in the debate on status. If the new rules do not provide clarity and certainty on who is an employee or worker, then inadvertent breaches will trigger these new enforcement procedures. The consultation closes on 1 June 2018.

Nick Willis is solicitor at PricewaterhouseCoopers (PWC)