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The Government needs to simplify the complexities and uncertainties in the gig economy as a matter of urgency

Court of Appeal’s ruling that Deliveroo workers are self-employed from an HR perspective doesn't change the tax position writes Robert Salter.

The whole area is a minefield for gig workers and those that wish to employ them. Last week the Court of Appeal ruled that Deliveroo drivers are genuinely self-employed for labour law purposes, which is different from the Supreme Court’s ruling in the recent Uber case, where drivers were held to be workers for labour law purposes.

But tax and social security law says that both the ‘workers’ in the Uber case and the self-employed drivers at Deliveroo are legally self-employed for tax and National Insurance purposes.

The complexity of the law in this area and the difficulty businesses employing workers can face in deciding whether someone is a genuine employee, a worker – a type of intermediate status between employment and self-employment – or genuinely self-employed, needs to be sorted out as a matter of urgency.

The disconnect in tax and labour law rulings arises from the fact that the tax and social security regulations only recognise two statuses for workers – that is, they are either employed or self-employed.

The law encourages businesses to try and treat gig economy workers as self-employed, and this can create significant savings for the employer compared to having a regular employee.

There are significant savings for businesses both in terms of social security, where companies avoid incurring a 13.8% employer National Insurance Contribution (NIC) liability, and because they are not faced with other costs, such as pensions auto-enrolment contributions.

The gig economy is here to stay, and the Government needs to address the complexities and uncertainties that exist in this area. This is necessary both to provide more support to gig workers, who may in many cases be quite marginalised and exploited, but also to assist those businesses who are trying to be better employers and to provide genuine support to workers with, for example, proper pensions provision as part of the overall reward package.

Otherwise the ‘pensions crisis’ that UK workers (and the wider UK economy) already faces – with the state pension being increasingly expensive and harder to justify on a longer-term basis, as UK society continues to grow ever older – will only continue to expand over the coming years and put even more pressure on a system which is already under strain.

Would you like to know more?

If you would like to discuss the above or how it may affect you, please get in touch with your usual Blick Rothenberg contact or Robert Salter, using the details on this page.

For any press queries, please contact David Barzilay whose details are on this page.

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