Independent sharing economy review – Issues for online labour exchanges and work platforms

Written on 26 Nov 2014

We are proud to have had the opportunity to talk to Debbie Wosskow of LoveHomeSwap about how Osborne Clarke sees the regulatory legal challenges and practical solutions for the industry during her consultation on the independent review published today. But what does this mean for online labour exchanges and work platforms?

Below we explore this in more detail.

Helpful suggestions in the review

  • ID verification – making this easier by allowing platforms to use UK Government online verification systems.
  • Disclosure and barring re criminal records – allow platforms access to digitised records.
  • Trade body to help online platforms to negotiate better deals with suppliers eg insurance policies.
  • HMRC guide to how consumers should deal with tax implications of what they earn via a platform.
  • Government labour exchanges should encourage work seekers to use online platforms to find assignments.
  • Platforms which plan a merely passive role (i.e.no human intervention) in helping individuals find assignments should not fall within the current UK recruitment regulation regime (which compels checks on certain types of worker, prohibits charges to work-seekers, requires certain health and safety checks and prohibits the platform from acting as a payment intermediary in certain situations). Instead there should be a separate lighter touch regulatory regime.

Other relevant suggestions

  • Skill sharing platforms to agree to ensure users are paid a living wage.  This took us by surprise.
  • UK Government to clarify the employment status of individuals who provide personal services via online platforms – what if any statutory rights will they and won’t they have, and who will owe them those rights (platform or hirer?)

What is not covered by the review?

  • Clarification/simplification of VAT status of supplies via a platform (European law so hard to change).
  • HMRC guide for platforms about what income tax and NICs liabilities they may have (e.g. under the Intermediaries legislation etc. which is the UK equivalent of Worker misclassification legislation). This is a “touchy” area and it was felt better to avoid it.
  • Clarification /simplification of Payment Services Regulations status of supplies via a platform (European law so hard to change).

What else is happening?

  • There is a parallel review by the UK government of UK recruitment regulation which will look at an exemption for job boards and online labour sharing/skills sharing platforms. The proposals have been drafted and are awaiting ministerial approval which is due “any day” according to the relevant UK Government department (BIS).
  •  If the platforms operate as payment intermediaries that brings into play the Payment Services Directive and related Regulations. The exemption that appeared to allow platforms to act as payment intermediaries may no longer apply in Germany or France and in due course the UK.
  • There are important current VAT issues for online platforms.

Our view

  1. The payment intermediaries legislation and legislation seeking to minimise false self-employment via intermediaries/platforms are unlikely to be relaxed significantly, leaving work sharing platforms and online exchanges with at least some risk of being liable to income tax and social security (PAYE and NICs) relating to workers who work via their sites.
  2. Platforms which operate as payment intermediaries appear likely to be subject to the Payment Services Directive and related Regulations at some stage in the future in the UK and possibly already elsewhere in the EU.
  3. The UK Government may play with an exemption from recruitment regulation for job boards and online labour/skill sharing exchanges, which may help a bit.
  4. …but possibly not much will change because too many people dislike “recruiters” and coalition governments are here to stay and I doubt they will prioritise potentially risky deregulation at a time when many people feel there is a growth of a vulnerable underclass of “non-employed” workers.