What does a Conservative win mean for IR35 and employment law?

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What does a Conservative win mean for IR35, employment law and job creation?

After what has been declared a huge victory for Boris Johnson and a Conservative majority, numerous calls are coming from HR for the Prime Minister to keep his various promises regarding IR35 and making changes to employment law, such as the developments in employee pay and family-friendly rights.

At time of press, the Conservatives have won 364 seats in the UK. In response to this news, Seb Maley, CEO of Qdos, an insurance and tax advice for the self-employed reminded Mr Johnson of the promise to review IR35.

Mr Maley said:

The Government has an opportunity to finally deliver for the self-employed who, after years of neglect, remain sceptical of the Conservative Party’s commitment to them.

The likelihood is, many freelancers and contractors will have voted Conservative based on the party’s IR35 promise. The Government now has a responsibility to honour its pledge to hold a genuine review of reform.

Boris Johnson must act now. A review of IR35 reform has to take place before April’s roll-out. If this timeframe is unrealistic, then changes need to be delayed or, better still, halted altogether.

While a review is a sign of progress, it doesn’t mean the changes will be scrapped. Therefore, contractors, recruitment agencies and end-clients must continue their preparations.

Dave Chaplin CEO and founder of contracting authority ContractorCalculator and director of StopThe Off-Payroll Tax campaign, which campaigns against the roll out of the “off-payroll rules” had similar things to say to Mr Johnson.

Mr Chaplin said:

In the run up to this election we heard a number of political parties pledge to review IR35 and as Boris Johnson re-enters No. 10 I would like to remind him of that promise.  Having a complex employment status test at the heart of the tax system hasn’t worked for 20 years under the intermediaries legislation and hasn’t worked under the new rules in the public sector either.  The Off-Payroll rules in their current proposed format create an unfairly burdensome scenario which has the potential to poison the entire engagement process between contractor, client and agency.

It will force thousands of contractors into false employment, expose self-employed contractors to excessive taxation as well as depriving UK plc. of essential access to talent and key skills and drive up project costs.  Combined, this will work to further incite tax non-compliance and tax evasion.

I would urge the Prime Minister to now confirm that he will conduct a proper review, put the Off-Payroll roll-out on hold and work with the contracting community and stakeholders on devising how best to recognise contracting and freelancing in the tax system.  An Off-Payroll review should be put right at the top of his agenda as he takes up office again.

Kate Palmer, associate director of advisory at Peninsula believes that employers may not be waking up to immediate change, but there will be noticeable differences in the future.

Ms Palmer said:

Employers can expect to see substantial changes to employment law under the continued Conservative Government, who this morning maintained power of the nation after nine years at No. 10.

While not as weighty as the Labour Manifesto on making changes to employment law, the Conservative manifesto promised a wide variety of developments in areas including employee pay and family-friendly rights.

Although not an immediate change, employers are waking up to confirmation that the National Living Wage will increase to £10.50 per hour by 2024, with the age threshold incrementally lowered to 23+ in 2021 and finally 21+ by 2024. The lead in time to this change will enable employers to factor increase wage bills into their future budgets.

Employers will also have to review their leave policies, as more time off will be given to new parents of a sick baby. A keen eye should be kept on any changes to paternity leave as the party will look at ways to increase take up. With flexible working to become the ‘default’ arrangement, employers may be forced to be more creative with working hours to ensure operational demand is still met. Working arrangements will also be impacted by a right for those with caring responsibilities to take time off.

With a promise to continue with the Good Work Plan which includes more rights for those in unpredictable work and to keep to the January 2020 Brexit deadline, it’s safe to say that employers will be kept busy over coming months and years.

Neil Carberry, chief executive of the Recruitment and Employment Confederation (REC), congratulated Mr Johnson and stated that a no-deal Brexit would be very damaging to jobs. He believes now a Brexit transitional deal can begin. He also added that IR35 should definitely be reviewed.

Mr Carberry said:

Congratulations to the new government on their victory. Boris Johnson’s team must now focus on stability, investment and growth in our economy. Business confidence in the economy is at a low point and job creation is slowing as our research clearly shows. A no-deal Brexit would be disastrous for jobs and must not be allowed to happen. The Brexit transition period must now be put into action and a realistic plan put in place for long-term trading arrangements, including for services – a critical part of our economy.

The biggest challenge to growth is skills shortages. The nation’s productivity hinges on government’s ability to address this. One huge opportunity is to open up the apprenticeship levy to the millions of people who choose flexible work. But for the sick to be treated, for homes to be built, and for food to be produced, the UK also needs an immigration system that meets employers’ needs for skills at all pay-levels – not just ‘the brightest and the best’.

Few things matter more to people’s daily lives than the work that they do – the government must act now to underpin the jobs of the future. While we welcome the Conservatives’ promise to review the IR35 tax reform, it is wholly unfit for purpose and implementation must be delayed.

However, Lee Biggins, founder and CEO of CV-Library, a UK job board, issued a warning.

Mr Biggins said:

Thousands of employers put their recruitment plans on hold in the run up to the General Election; but now it’s out of the way, businesses must try to continue as normal. As we approach the New Year, it’s the ideal time for to move past the uncertainty and push forward with their hiring efforts – especially as job hunters will be doing the same.

Whether the Conservative party will be able to uphold its pledges around immigration, national living wage, income tax thresholds and the recruitment and retention of NHS staff remains to be seen particularly as our research shows the majority of Brits didn’t think any of the political parties could live up to their promises around job creation.

The real focus for the government needs to be on instilling confidence back into our society; as this has been somewhat absent over the past 12 months.

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