The Association of Professional Staffing Companies (APSCo) has this week given evidence at the independent review of employment practices in the modern economy led by Matthew Taylor, and set up by the Prime Minister.
The purpose of the review is to look at how employment practices need to change in order to keep pace with modern business models. The review, as well as hearing from Tania Bowers, General Counsel at APSCo, heard evidence from a number of other stakeholders including Unison, the GMB, BECTU and the IOD.
Tania Bowers (pictured below) made the point that much of the media attention around this review has been focused on the gig economy in relation to the lower paid, lower skilled employment market regarding a lack of security and employment rights – and to the so called tax advantages of self-employment. She also explained that this is only one section of the labour market and that APSCo members recruit for professional sectors such as IT, banking, finance, engineering and life sciences where the situation is very different.
Professional contractors need to be differentiated
She stressed that the contractor limited company route, known as personal services companies (PSC) is a route to market that offers limited liability to the worker and a means of working in business independently. While the general perception by Government is that the main drive for the growth in self-employment is tax, the real picture is more nuanced. Independent professionals are not driven to become self-employed because of tax incentives – but by a willingness to trade traditional job security for flexibility and control and there is survey data to back this up.
She also pointed out that contractors in professional sectors are experts in their respective fields. They have to be sourced on a ‘just in time’ basis to deliver specific services over a limited period for an agreed price. This is highly beneficial to UK plc in terms of being able to manage budgets and to shrink and grow workforces as demand dictates.
Employment status should not be determined by tax law
Tania Bowers also stressed that, against a backdrop of grossly underestimating the number of contractors genuinely in business on their own account, HMRC is increasingly seeking to tax PSC contractors as employees, citing the off payroll rules in the public sector. There is no allowance by HMRC for the lack of dismissal rights, continuity of assignments, workplace entitlements or employment protections and so In essence the determination of employment status is being driven by tax law which is wholly inappropriate.
Commenting on her appearance at the review Tania Bowers said: “We want to promote a more positive narrative around responsible recruitment practices and the established routes to market which they offer. We strongly feel that the benefits that PSC workers bring to the economy makes it critical to both differentiate them within the gig economy and also to broaden the conversation from a solely taxation shortfall perspective.”