Regulatory Outlook

Employment and immigration | Regulatory Outlook September 2022

Published on 28th Sep 2022

What might the new prime minister mean for employers? | Chancellor axes IR35 reforms - staffing company and end-user liability to be removed from April | EU Transparency Act

What might the new prime minister mean for employers?

As detailed in our Insight, the appointment of a new prime minister, Liz Truss, could lead to a number of areas to be revisited which will be of interest to employers. These include: reforms to the Working Time Regulations 1998, which provide (among other rules) for a maximum working week and the right to paid holiday; and proposals to enact minimum service commitments for public sector services. At the fiscal event of 23 September, the chancellor announced a package of tax cuts, including to national insurance contributions and other changes, including to planned IR35 reforms. See our Insight for more on the government's shift in its tax policy.

Chancellor axes IR35 reforms - staffing company and end-user liability to be removed from April

On 23 September, the chancellor of the exchequer delivered his first fiscal event. Within this, he announced that the 2017 and 2021 IR35 reforms will be repealed from April 2023 as part of the government's "Growth Plan 2022". Read our Insight for more.

EU Transparency Act

The EU has recently introduced the Directive on transparent and predictable working conditions (also known as the EU Transparency Act).

The Directive has introduced a right for new and current employees to receive certain terms of their employment including details of any automated decision making and information ahead of any international postings. The Directive was due to be implemented into domestic law by EU Member States before 1 August 2022. Although not all Member States have met this deadline (for example, France and Spain), we expect to see implementation across the EU over the next few months. Read more in our Insight.

OTS to review tax implications of hybrid and distance working

On 27 July 2022, the Office of Tax Simplification published a scoping document for the review it is going to undertake, examining the tax and social security implications of changing working practices. In particular it will examine the increase in working from home (and what expenses should be tax deductible) and working from some overseas locations (and whether/when that might create tax liabilities for the "employer" in the country where the workers work, including corporation tax and VAT liabilities). This may, among other things, lead to regulation and clearer tax rules about the use of employment intermediaries such as so-called "employer of record" companies.

EU Platform Workers Directive – tough employment status test for hirers proposed

The EU Platform Workers Directive was drafted by the European Commission to introduce a rebuttable presumption of employment status for any contingent worker (i) whose work was found or provided via a staffing platform or other process involving use of technology (such as automated matching) and (ii) who failed two or more statutory tests. Developments this summer may mean that the European Parliament stage of review of the draft Directive will remove the statutory tests leaving a broad "rebuttable presumption". This will give hiring organisations far less certainty about who will and will not be deemed to have employment status. Workers may be assumed to have employment status until the hirer establishes otherwise.

If this measure is introduced as proposed, platforms which find assignments for independent contractors may need to partner with payroll or staffing companies to minimise tax and employment status claims relating to gig workers and others working via intermediaries who use technology to match candidates to vacancies. The only way to continue engaging these workers on a self-employed basis may be to do so using so-called "statement of work" arrangements in which a fixed price is paid for a pre-scoped defined deliverable.

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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