The recent Queen’s Speech has been widely criticised by employment experts, after it became clear that the government have failed to deliver on their promise to publish an Employment Bill to improve workers’ rights.
This is despite the speech – which provides the government the opportunity to highlight its priorities for the coming months – largely focusing on jobs, skills, training and the economic recovery.
A pledge was made in 2019 to introduce an Employment Bill, with the BBC reporting that Prime Minister Boris Johnson reassured critics that legislation would be introduced to protect workers who feared that their rights would be impacted by Brexit.
More recently though, concerns have been raised about non-compliant umbrella companies and the proliferation of tax avoidance schemes, which are targeting contractors impacted by recently introduced IR35 reform.
IR35 reform sees rise of non-compliant umbrellas
Following IR35 changes in the private sector, medium and large businesses are now responsible for assessing the IR35 status of contractors they engage. As part of the reform, the liability has also been transferred away from the contractor to the fee-paying party in the supply chain.
This has led some businesses to insist that contractors must operate via umbrella companies to continue working with them - an arrangement that means IR35 is not a consideration. This is because individuals working via umbrella companies are deemed as employees.
The rise in forced umbrella working has led experts to call for regulation in the umbrella industry, with specialists urging the government to develop specific legislation that prevents the rise of non-compliant firms.
This is so to avoid a repeat of the Loan Charge, which has seen tens of thousands of contractors handed staggering retrospective tax bills having unassumingly worked through disguised remuneration schemes, which they entered upon the premise that they were compliant and perfectly legal.
Skills ‘revolution’ promised, but no sign of Employment Bill
However, while the government unveiled plans to offer workers opportunities to upskill in the Queen’s Speech - with the aim of creating a skills “revolution” for England - the omission of the long-awaited Employment Bill did not go unnoticed.
Recruitment & Employment Confederation’s (REC) Neil Carberry made clear his disappointment, saying the Bill is “long overdue”:
“We were surprised by the lack of a specific Employment Bill in the speech – but we hope the commitment on plans to support jobs and improve regulation will see key issues tackled in the near future."
“A Bill is long overdue. It was due to contain a number of measures to extend and protect workers’ rights, and create a Single Enforcement Body to tackle abuses in the labour market – and could also have provided further guidance on flexible working and the regulation of umbrella companies."
“We hope to hear more about these issues from government as they can’t just be side-lined as the labour market recovers.”
Government will deliver Bill when ‘time allows’
In response to mounting pressure - which was exacerbated further by a BBC investigation that exposed as many as 48,000 mini umbrella companies in the UK which are operating non-compliantly - the government issued the following statement to online magazine, The Register:
"We remain committed to introducing legislation to expand state enforcement for agency workers to cover umbrella companies and extending the remit of the regulator to investigate any relevant complaints relating to umbrella companies. We will bring forward an Employment Bill when Parliamentary time allows."
Evidently, it remains to be seen when the Bill will arrive. However, after Chair of Employment Status Forum Rebecca Seeley-Harris and accountant James Poyser submitted a draft policy to the government, titled ‘Umbrella companies - Call for Regulation’, independent workers may not be left waiting long until policy is introduced that targets non-compliance in the umbrella industry.
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