In this weeks Leading the Way blog, Paul Kyte, Head of Client Development at Bristow & Sutor, considers changing attitudes towards self-employment and how this might impact the enforcement industry.
At face value, Uber losing a landmark case on drivers being classed as self-employed may not seem cause for concern to any Enforcement Firms, but there are significant parallels between how some businesses in our sector operate and the outcomes of this case. Many ‘gig-economy’ workers are in professional services and the rise of court cases and rulings against applying ‘self-employment’ to these scenarios should be reason to re-assess the suitability of employment models.
At Bristow & Sutor, we are fully committed to a direct model of employment as we believe this increases accountability, efficiency, motivation and results. But not every enforcement firm follows this same approach and many still currently succeed by exclusively using self-employed EAs. Running a search for Enforcement Agent Jobs online highlights the large quantities of posts promoting the benefits of self-employment and the scale of self-employment within the industry. It is not unfeasible to think that a large Enforcement Firm that engages with hundreds of independent EAs every week could soon face the same line of questioning that Uber has. If that happens and the same stance is taken towards our sector, it could change the way a significant portion of the industry operates moving forward.
What is the gig-economy?
The term ‘gig-economy’ actually relates to an environment in which temporary positions are common and organisations contract with independent workers for short-term engagements. Instead of a salary, workers get paid for the 'gigs' they do, like a food delivery or a taxi journey, or in the case of an Enforcement Agent when a debt is collected. Employers often like this model because it is a very flexible arrangement, meaning they only pay when the work is available and don't incur expensive staff costs when the demand is not there.
It is hard to give a consensus on these approaches within Enforcement as the level at which they are implemented varies from firm to firm. It is clear however that operating in this way can be appealing to some because it avoids additional costs associated with employment such as National insurance contributions and Holiday pay. It is also true that in some circumstances, workers might not have protection against unfair dismissal, no right to redundancy payments, no right to receive the national minimum wage, no paid holiday and no sick pay. Some firms will still offer these things, but others may not. Typical feedback we have received from our members of staff that join us from previously self-employed circumstances includes an appreciation of the more direct support and team involvement we provide in decisions regarding actions, arrangements and vulnerability.
Public authorities such as local councils often stipulate that contractors must adhere to various pieces of legislation and must be PAYE or paid the Minimum or Living wage. However, Employment law doesn’t always cover the self-employed, because they are technically their own boss. They still have protection for their health and safety and, in some cases, protection against discrimination, but rights and responsibilities are set out by the terms of the contract they have with their client. In theory, this could lead to future problems.
What are the implications?
There is no implication that any Enforcement Firms are doing anything wrong by utilising self-employed staff, this has been the norm for many for a very long time. But the logic being applied in rulings against large companies with similar models in other areas should not be ignored. This is undoubtedly a complex situation and worker status for employment law can be different to their status for tax purposes. The Governments’ own guidance is not clear cut on the matter and remains somewhat open to interpretation.
Although cases involving workers from the likes of Uber, Sports Direct, Hermes and Deliveroo are based around companies allegedly paying close to or less than the minimum wage (which is unlikely in the case of EAs), there are wider implications. The loss in tax revenue for the Government is also something you also have to expect will impact any decisions made. This is not because self-employed workers are paying less Tax, but because in many of these scenarios' employers are not required to pay National Insurance Contributions. It is important to also remember that Enforcement Firms are generally collecting Public and Government debt, dealing with very sensitive matters and highly personal data. It would seem logical that it is easier to control GDPR, data protection and other similar requirements when dealing with employers opposed to sub-contractors.
This topic will undoubtedly remain at the forefront of minds, especially when considering the new IR35 rules being introduced in April 2021, which will assess whether a contractor is a genuine contractor rather than a ‘disguised’ employee.
So, will things change pre-emptively?
Whilst we are not expecting to see the entire industry align with our commitment to a direct model of employment overnight, we would not be surprised to see more firms consider this in 2021. Many businesses have taken stock during 2020 due to the coronavirus pandemic and changes to the way they operate have been forced out of adapting to lockdown and adhering to the latest regulations and safety practices. Despite the benefits we saw from having a prepared workforce, ready to return as soon as this was made possible, some saw self-employment as integral during this time period; as it meant they could simply stop sending work. But it is clear from the recent Uber ruling that the employment status of workers remains a hot topic, including in the professional services sector.
Expert observers of the Supreme Court ruling believe that this judgement will have wider implications for other ‘gig economy’ workers and that the ruling focuses on the control that companies exercise over how individuals work and with that comes responsibilities for their conditions and well-being. You have to wonder, if it was determined that all EAs must be employed, or classed as ‘workers’, in future, what impact might that have on businesses that did not take heed of examples like Uber? As the rules and regulations pertaining to the ‘gig-economy’ evolve before our eyes, it makes sense that Enforcement Firms, especially those who rely on self-employed staff, remain vigilant and ensure they are prepared for any scenario the future may bring.