Earlier this year Prime Minister Theresa May addressed Mathew Taylor’s report “Britain’s Working Practices” by promising millions of workers better holiday and sick pay rights, in addition to stronger contracts. In response, those inside the contracting industry have urged the government not to presume that all contractors and self-employed workers want employment rights.

The problem, it seems, lies with insufficient differentiation within the freelance sector. While a significant proportion of workers are at risk of being exploited by unscrupulous organisations, there are many workers who have chosen a freelance lifestyle for the flexibility, choice and control it offers them. Many contract workers don’t want employment rights as they can confuse the matter of proving self-employment when it comes to determining factors such as IR35. 

By adopting employment rights, bona fide contractors could be at risk of losing out in IR35 investigations as HMRC’s online assessment tool (CEST), appears to operate according to a double standard. While the presence of employment rights will automatically result in an inside-IR35 determination, the absence of employment rights is simply ignored by HMRC. If contractors are found to be inside IR35, they will find themselves considered an ‘employee’ for tax purposes, while receiving zero entitlements to employment rights and benefits.

The confirmation in this month’s budget that off-payroll reforms will be extended to the private sector is set to bring the issue of employment rights to forefront of the debate. Many contractors feel that the government continues to make concessions in other areas at the contractor’s expense, while continuously undervaluing their contribution to the economy. Although compliant umbrella companies offers contractors some employment benefits, it’s likely that contractors will start demanding the employment rights they’re entitled to if forced to work within IR35.

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