Review of modern working practices

Last updated: 07/10/2024

Umbrella companies: In 2023, the Conservative government published a consultation titled Tackling non-compliance in the umbrella company market, which proposes closer regulation of umbrella companies and options for responsibility for unpaid tax debts by umbrella companies to be borne by the agencies and end users of the labour supplied by umbrella companies. This could have wide-ranging consequences for the flexible labour market following the reform of off-payroll working (IR35).
On 18 April 2024, HMRC published an update, indicating that the previous government was ‘minded to introduce a due diligence requirement to drive out bad actors from labour supply chains’. However, a formal response to the original consultation is still outstanding. On 22 April 2024, HMRC issued a warning for employment agencies using umbrella companies in ‘Spotlight 64’. The current government has not yet commented on its plans for dealing with umbrella companies.
The case law surrounding employment status and worker rights continues to evolve at pace, with several lead case decisions expected to have a significant impact on how employment status is to be determined. Important decisions are currently awaited from the Upper Tribunal in Gary Lineker Media and PD & MJ Ltd.
Prior to the UK election on 4 July 2024, the Labour party published their ‘Plan to make work pay.’ Amongst wide-ranging reforms to employment rights, the proposals also include a plan to move to a two-tier system of employment status, comprising of the self-employed and a single worker status. This could have significant implications on the requirements to operate PAYE and pay employer’s national insurance contributions. The current government is expected to consult in detail on these proposals before implementation.
Timing: no specific reform plans or timetable have been announced.