New guidance on employment status in the UK

If your to-do list includes grappling with tricky questions on employment status, new guidance has been published to help. In 2018, the government consulted on employment status and it has now published its response as well as two guidance documents – one for HR professionals and one for individuals.

The 2018 consultation sought views on a range of points.  There were three key questions:

• should there be a statutory test for employment status;
• should we retain or remove limb (b) worker status, which the consultation described as an “intermediate status”; and
• should the tests for employment status for tax purposes and employment rights purposes be aligned?

Responses to the consultation were mixed on all questions, particularly a statutory test for employment status.  In light of the lack of consensus, and the impact the pandemic has had on the labour market, the government has decided not to legislate in this area.  It cites the risk of additional cost and uncertainty for businesses in the short term and the complexity of drafting suitable legislation.

Instead, the government has published technical guidance on employment status and employment rights for HR professionals; guidance for individuals, to help them understand their employment status; and a checklist for employers that summarises the key determinants of employment status, as well as the rights that employees and workers enjoy.  The technical guidance aims to draw together the existing body of employment status case law and offer practical advice and examples.

The government also plans to update its guidance on Calculating the Minimum Wage to make it clearer how the National Minimum Wage legislation applies to gig economy and platform workers.

The new guidance will not be a panacea to all employment status queries and disputes.  It will be a helpful source of guidance to those dealing with one of the trickiest areas of employment law.  You can access the new guidance here and your usual Dentons contact will always be happy to help resolve status-related headaches.