• 31/10/2018

New tax for self employed could be the distraction set to upset fragile labour market

In a struggling labour market where supply is continuing to outstrip demand, is a tax crackdown on those self-employed, who may or may not be underpaying on national insurance contributions, simply going to further upset the employment apple cart?

For sure, we have to applaud efforts to ensure that all employed, and their employers, pay the correct level of tax and NI and a robust system that enforces that basic requirement is the responsibility of both employers and the government.

But this latest announcement has myself and many more in the recruitment industry genuinely concerned. The thinking and timing behind this reform seems flawed and ill-considered.  Associations, that represent the interests of many self-employed workers and contractors, have challenged the evidence behind this move and answers have not been forthcoming. Surely this alone should raise enough concerns to allow for a stop and think moment?

However, if introduced, this new legislation can only be as good as it is enforced. Delegate responsibility of that enforcement to recruitment agencies and businesses and the situation becomes more troubling and problematic.

As a recruitment agency working nationwide across multiple sectors, we fill 18,000 positions every year. Do we now have to be accountable and rule on whether each worker is under direct supervision, direction and control or whether they are genuinely self-employed?

We need confirmation of the problem, clarity on areas of responsibility and support to enforce.

And we will have to, as an industry, flag that this move could adversely affect an already fragile labour market. We continue to struggle to find the level of workforce needed to meet supply – either because they are simply not there in numbers or no longer willing to work for low hourly rates. Additional legislation could act as another employment barrier and we could lose more people from the marketplace as a result.

Whilst we wait for this new strategy to be introduced in 2020, it allows plenty of time to check the validity of the proposal.

Our clients, the key and volume employers of contractors and the self-employed, are facing far greater concerns – the impact of a no deal or bad deal Brexit, slowing and stalling UK growth figures and the most chronic lack of workforce candidates seen in the lifetime of most businesses. There are surely bigger issues to tackle and better answers to find?