As a consultancy The HR Dept is at the coalface of dealing with the inadequacies of the current national employment status situation. Our HR franchisees tell us that SME owners recognise the importance of attracting and retaining empowered and enthusiastic staff, but find the different rights and legislations accompanying the varying statuses at best confusing and at worst damaging to their businesses.
So we recently submitted our response to the government’s inquiry into The Future World of Work and Rights of Workers, overseen by the Business, Energy and Industrial Strategy Committee.
Our submission made five key recommendations:
- Employment status should be simplified and redefined
- All groups should be protected and given choice over their status
- Insurance-type schemes should be provided for freelancers and the self-employed
- Business advisers should be educated about the definitions and risks for their clients
- Care should be taken over the imposition of measures that result in costs to businesses.
Several issues need addressing urgently. The first is that of ‘false self-employment’; whereby personnel who are ostensibly self-employed are actually, either through choice, ignorance or will on the part of the business, employed but denied any of the benefits they are entitled to.
The headline-grabber was our call for the abolition of worker status, which is a categorisation we feel is too complicated to be useful in the current climate, as the ‘gig economy’ becomes more prevalent and the working habits of our population change.
The HR Dept doesn’t believe that workers having fewer employment rights is where we should be as a nation. Employment rights are already low at statutory level, and workers now have the vast majority of them in any case.
It is important to mention that moving the self-employed to worker status in a bid to end false self-employment would incur enormous cost to UK businesses, even though tax receipts would rise significantly.
So what would be the impact on the economy if we were to scrap ‘worker’ in favour of employee, while simultaneously introducing a revised self-employment category? As workers and employees are all entitled to statutory benefits, the national minimum wage, and statutory protection, what would the business challenge be in giving full employment rights to those who are deemed to be workers?
Redundancy rights do not accrue until after two years’ employment, so if this happened to a casual worker what would the cost be? Truly casual workers would have very limited average pay for the redundancy calculation. And if they were being used frequently then their casual worker status, and absence of mutuality of obligation, is questionable anyway.
The final issue to address is that of education. Many small business owners are not HR experts and are also receiving advice – from solicitors, accountants and business advisers – that is not backed by HR expertise either. Motives to protect the bottom line of a small business can leave owners at unacceptable risk, should workers currently designated self-employed realise that they would win cases in the civil courts if they argued they were eligible for employee benefits.
In general, we recommend greater freedom and flexibility for business owners and individuals, to protect vulnerable workers and end exploitation. The demand for genuine choice comes from both employers and individuals and will only increase in the future.
Sue Tumelty is founder and executive director of The HR Dept