HR BLOG: Why the ‘Worker’ status should be abolished

The revolution that has been happening over the last ten years has transformed the way we live. Mobile phones have gone from merely calling and texting devices to windows on the whole world.

We can check emails, grab an Uber and post a picture of a fancy breakfast with a swish of a finger or tap of a screen.

This mobile revolution has led to a transformation in the way many people work, too. It’s much easier to ditch the whole 9-5, tied to a desk thing. Instead, people can be fully connected from their local café, skype from Europe, or in the high-profile case of Uber, clock on and off using an app.

Progress is brilliant, isn’t it? Except, other things haven’t kept up with this digital uprising. Like legislation for example. Yes, the gig economy – that is companies hiring people with self-employed status rather than employees – has a dark side. On paper this gives greater flexibility however the reality is that companies are exploiting the individuals and avoiding their employment and tax obligations

Under the current system, those with employee status have a full range of statutory rights including holiday, sickness, maternity/paternity pay and the National Living/Minimum Wage. Of course, they also have a range of obligations to the employer. Those with worker status retain some of these rights alongside most of the obligations. Meanwhile, the self-employed have no statutory rights, but can negotiate the nature of their working relationship through a contract with their client.

Keen to catch up, the government’s Business, Energy and Industrial Strategy Committee has launched an inquiry entitled: The future world of work and rights of workers to help inform future policy. The HR Dept has written a submission outlining our views.

Our headline view is that the ‘worker’ status should be abolished. It is confusing for businesses and their advisers. People hired under this status often find themselves subject to the same control as employees but with fewer rights. We do not think that is correct in this day and age.

Our other proposals include:

  • More choice over employment status, but with a safety net for all.
  • An insurance-style government scheme to provide basic protections (E.g. sickness pay) for freelancers and the self-employed.
  • Better guidance for businesses and their advisers on the implications of choosing the wrong employment status.
  • In a climate where businesses have already faced a raft of other increasing costs, the government should be mindful of imposing additional costs for businesses when they shift people from self-employed to employed status.

Tempting as it may be to get people in at a discount by calling them self-employed, it may not be a wise practice in the long run. You might find yourself taken to court for a holiday pay claim, or have HMRC knocking on your door with tax demands.

It is our belief that treating employees fairly is one of the fundamentals that makes a successful business. We await the results for the government enquiry with interest, and are on hand to advise any businesses on how best to take people on with the current myriad of options.

Alison Schreiber runs The HR Dept Durham and Darlington franchise, and works with a number of businesses across PBP. For more info, visit HR Dept Durham and Darlington or call Alison on 01325 526036 or 07535 853226.