Is the world of contracting under attack? Maybe

Is the world of contracting under attack? Maybe

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Posted ByAdmin

A recent study by McKinsey Global Institute revealed that 97% contractors are happier than employees who work full time. The United Kingdom currently has 14m independent professionals. This spectacular figure comprises a quarter of the UK’s working population.

Out of these 14m workers, 56% of them follow the mode of self-employment – a fact that greatly emphasizes the recent shift from the traditional employment model to the independent one. There’s no doubt that a huge chunk of the population is choosing to work for themselves in a more flexible setup.

However despite the positive slant, all is not hunky dory for such working professionals. In October 2014, the UK government announced a “top-level review” that will be launched to assess the employment rights of independent professionals.

The intention is absolutely correct as with this review, the government plans to catch hold of those employers in the market who misuse the mode of contracting. Some of the issues that will be picked up in the reviews are whether or not the contractors get proper training and if they require any representation outside of the trade unions.

The government’s motives are quite clear as they attempt to harmonize the worker’s right – irrespective of mode of employment. But this might not have a positive impact on limited company contractors who let go of their employment benefits and security of permanent employment to work on their terms, to be their own boss.

If the government seeks to standardize employment rights, there’s a greater tax burden on contractors. Moreover with the pending IR35-related rule set to come into effect from April next year, determining the public sector contractor’s employment status is going to fall in the hands of recruitment agencies or end-users who – in turn – will, no doubt, apply a risk-adverse approach to keep HMRC off their backs.

This means there is a high chance of them identifying a mass of contractors to be inside IR35. With the Autumn Statement just a few days away, let us hope the government’s review is able to differentiate between the skilled limited company contractors and the low skilled temp workers – both groups of which demand a different set of rules and policies to function.