Thursday, 3 March 2016

Bill to establish a review of rights for disadvantaged self-employed

A report from Hansard 02 03 2016  A new Bill -  The Employment Status (Review) Bill

Self-employed persons are disadvantaged
The self-employed have fewer rights than employees. They are not entitled to receive sick pay, holiday pay or the national minimum wage, and are responsible for their own taxation.

Workers have a number of basic rights, including the right to the minimum wage and annual leave. Employees have the same rights as workers, plus additional rights, including the right not to be unfairly dismissed and the right to redundancy pay. An employee is an individual who works under a contract of employment, which means that employment rights turn on whether or not the contract under which a person works is a contract of employment.

Self-employed persons are instead regarded in law as providing a service for a customer or client. The distinction is often described as the difference between a “contract of service” and a “contract for services”.

Bogus self-employment is when an individual is treated by a company as being self-employed but their relationship with the company exhibits the features of an employment relationship. If the company says the individual is self-employed and the individual says he is actually an employee, there is only one way to settle the issue and that is by going to court. A contractor who wishes to challenge their employment status has to go to court, which is both arduous and expensive. Furthermore, the question of employment status is one of the issue most widely litigated on in employment law.

The Employment Status (Review) Bill
"The Employment Status (Review) Bill" - was had its first reading in the House of Commons on March 2nd. The Bill makes provision for an independent review of the operation of the Employment Rights Act 1996 in relation to the determination of employment status and dispute resolution mechanisms. The review will
·         seek to establish greater clarity regarding the criteria for "self- employment"
·         consider a forum where individuals can query or challenge their employment status without having to go to court such as an ombudsman or Government agency,
·         create new penalties for companies that intentionally use bogus self-employment contracts
·         consider what rights and support self-employed persons should be entitled to.
The Bill's second reading is scheduled for 11th March.

ARAG comment
As this Bill is a Private members' Bill (introduced by an opposition MP) it will only be given parliamentary time if it is supported by the Government. We will however monitor its progress and track developments of the independent review should the Bill become an Act of Parliament. We always seek to follow legislative developments, to anticipate impacts brought about by changes to the law and to consider how best to adapt our products to respond to any new risks. 

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