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IPSE explores how Labour’s plans for radical employment law reform could potentially remove need for IR35

Ahead of the next general election, the Labour Party has been promising reforms to the employment landscape. Speaking at the TUC conference in September, the deputy leader Angela Rayner, announced a “cast iron commitment” to bring forward an employment rights bill within 100 days of Labour coming into power. The party’s vision for workers’ rights can be found in a green paper entitled: ‘A New Deal for Working People.’

Among the key changes mapped out in the proposals is the promise to extend sick pay to the self-employed, tighten whistleblowing and discrimination laws for the self-employed, while introducing a Single Enforcement Body.

Angela Rayner’s office has been working closely with organisations like the Association of Independent Professionals and the Self-Employed (IPSE) to try and gauge an understanding of the self-employed sector and potential barriers to growth.

The IPSE has been campaigning against the UK’s off-payroll IR35 rules that are designed to stop contractors working as ‘disguised employees,’ by taxing them at a similar rate to employment, for 20 years. As well as campaigning against IR35, the IPSE advises contractors and the self-employed on how to navigate it. Working alongside Labour, the IPSE got to review Labour’s employment law reform proposals. The body generally welcomes the commitments, particularly Labour’s plans on employment status.

Joshua Toovey, Senior Research and Policy Officer at IPSE, notes how Labour would replace the current three statuses used in employment law – employed, self-employed and worker – to just two. This would see a single status of ‘worker’ created for any engagement that is not considered ‘genuinely self-employed.’ Toovey reflects that if employment status rules are replaced and ‘worker’ and ‘genuinely self-employed’ statuses are established and clearly defined, it could remove the current reliance on IR35 law. This, according to the IPSE Policy Officer, could ‘potentially lead to clients becoming more confident in engaging contractors they consider to be ‘genuinely self-employed.’

“Ultimately, this proposal could (and it’s important to stress the word ‘could’) bring about a greater alignment of tax status and employment status which would undoubtedly have an impact on the application of IR35 case law,” writes Toovey.

Calling for an accurate definition of the genuinely self-employed, the IPSE says it will continue to work closely with the Labour Party and specifically Angela Rayner’s office, which has responsibility for Labour policy on SMEs.

Of course, a Labour government is by no means guaranteed, but the party is consistently ahead of the Conservatives in the polls, and have a very good chance of forming the next government. For the IPSE and the wider self-employed community, Labour’s proposals to create dedicated policy for the self-employed are interesting.

Phill Machell

Phill Machell, former Executive Director at Michael Page Interim, has been appointed as Partner at Bailey Montagu, one of the UK’s most innovative and respected executive search and interim management firms.