July 24th, 2017 | Industry News
Extensive changes to the UK’s employment law and practices were promised by the Taylor Review released on 12 July, but already the government is admitting that it may be impossible to implement any of the Taylor recommendations.
Recruitment, self-employment and blurred employment status
The report covers the staffing industry, the gig economy and has a specific focus on worker classification, a thorny issue for recruitment as the definition of ‘employed’ and self-employed is blurred by Uber, Deliveroo and other cloud-based recruitment systems that crowd source gig workers.
The report signalled out at recruitment agency work as ‘important … in a vibrant market’ and suggested that clarity of employment status and worker rights would help the recruitment industry continue to make gains. An Employment Agency Standards Inspectorate is also recommended to police workers’ rights compliance. Sector leaders view this as a failure to promote corporate governance and likely to negatively impact already struggling government bodies charged with enforcement.
Swedish Derogation under attack, but SAAS recruitment encouraged
The Swedish Derogation came in for attack by Taylor who said it should be abolished. Essentially this is a system that allows recruitment software to recognise temps who receive payments between assignments as a way of establishing a stable relationship with one agency. Taylor recognises that the ‘contingent labour market’ is one of the UK economies major assets and encourages more transparent and modern working practices such as SAAS recruitment software and novel ways of paying gig workers via platforms rather than cash. This seems likely to create a whole new raft of recruitment issues and intermediaries who will solve this platform problem for both recruitment consultancies and classic employers who need to take on temporary or specialist staff.
Anderson Group in Tax Avoidance battle
In other news, Anderson Group has closed down an aggressive tax avoidance scheme in a fashion that could stop HMRC from recouping millions that have been withheld by exploitation of VAT and NI rules that were designed to help very small businesses but have been utilised by more than 2000 Anderson clients to avoid tax payments. The large component of Philippine nationals involved in the defunct scheme is likely to interfere with HMRC’s ability to investigate and recover tax owed. A tax barrister has suggested that a prosecution for tax fraud would be a strong possibility given the circumstances.
The scheme was supposed to work by transferring the contracts of low-paid workers from a single large employer, via employment software, into a network of thousands of mini companies. As an example, if a recruitment consultancy supplied 70 security staff for a festival, the scheme would create 35 new tiny firms, each employing just a couple of workers. Each firm was registered for flat rate VAT, so they could charge it at 20% but pay back to the exchequer at around 10%. The mini companies could each also claim government employment allowance of up to £3,000 per year.