Many businesses engage freelancers, contractors and other self-employed workers. However, a new Government consultation means some businesses may need to review these arrangements. The consultation aims to tackle bogus self-employment. At the same time, it seeks to improve protections for people who are genuinely self-employed.
What is bogus self-employment?
Bogus self-employment happens when a business describes someone as self-employed, but the reality looks different. In practice, the working relationship may suggest that they are entitled to employment protections.
The Government estimates that as many as 900,000 people could be affected. As a result, it is considering whether businesses and workers need clearer rules. These rules would help everyone understand where the dividing line falls.
What do the proposals aim to achieve?
New proposals could change self-employment rules in several important ways. Firstly, they aim to make employment status easier to determine. Secondly, they could improve access to key rights for people who are, in substance, employees or workers. These rights include the National Minimum Wage and paid holiday.
In addition, the consultation looks at whether genuinely self-employed people should get clearer written information. This information would set out the terms of their engagement.
Why labels are not enough
For businesses, one point stands out. The label you give an arrangement does not necessarily decide the legal position. Instead, how the relationship works in practice still matters. In particular, consider:
- how much control your business has over the individual
- whether the individual works only for your organisation
- how much freedom they have over when and how they carry out the work.
Does this affect tax status?
The Government has not changed the law yet. Moreover, the consultation covers employment rights rather than tax status. Tax status still sits under a separate framework. Even so, new proposals could change self-employment rules in ways that affect how you engage people.
Why review your arrangements now?
Businesses that rely heavily on freelance or contract labour should act sooner rather than later. Specifically, you should check both your written contracts and how the working relationship operates day to day. After all, the two do not always match.
The consultation closes on 8 January 2027. Consequently, businesses have time to consider their current arrangements. For example, you can check whether any arrangements might become harder to justify if the Government tightens the rules. Ultimately, new proposals could change self-employment rules, so preparing early makes good sense.
Get in touch
Do you engage freelancers or contractors? Our team can help you review your arrangements and understand how the changes might affect you. Contact us today to discuss your position.
