Employment and immigration| UK Regulatory Outlook November 2024

'All change' for UK contingent working and gig platforms: 7 predictions for 2025 to 2030 

Around the world there is increasing government and media focus on the apparent inexorable growth in gig working and non-standard employment models and the general precariousness of some types of work.
We have analysed how the commercial models of staffing companies and platforms and how use of contingent workers will be affected by proposed tax, employment law and regulatory changes including the UK Employment Rights Bill and October 2024 Budget proposals.

The key predictions are as follows:

Prediction 1: Increases in employment taxes such as employers NICs, "day one" rights for employees and rights to guaranteed working hours for workers will lead to increased interest in self-employment models. This will sometimes be via legitimate self-employment models but sometimes will instead involve aggressive tax-avoidance schemes, perhaps via "dodgy" intermediaries.

Prediction 2: There will still be no clear statutory test by 2030, let alone 2026, as to who is genuinely self-employed, but there may be other new measures making it harder to engage certain types of people safely on a self-employed basis.

Prediction 3: There will be an increase in agency worker usage via staffing companies. The UK will likely retain this mode of engagement for several years, at least, as an alternative to employment and self-employment. Because these agency workers will not be "employees", many organisations may see using agency workers as a way of minimising the impact of day-one employment rights for new starters (and possibly guaranteed hours rights). However, organisations using this approach will need to watch out for possible anti-avoidance rules imposing limits on when agency workers status can be used and, at some stage, guaranteed hours rights may be introduced for some types of agency worker.

Prediction 4: Giving guaranteed hours rights to agency workers will not be straightforward and may not happen quickly – and there may be carve outs for certain types of work. This regime may be particularly difficult for smaller staffing companies and hirers.

Prediction 5: Any surge in tax-driven self-employment will reduce when HMRC steps up enforcement action in the next few years, building on preparatory steps currently being taken by HMRC under IR35 and other tax measures.

Prediction 6: Use of dodgy types of umbrellas, "employers of record" and similar employment intermediaries will come under attack, and many will need to make specific adjustments to their business models. But it will be hard for new umbrella legislation to define what is and is not an "umbrella".

Prediction 7: Regulatory activity will increase under the new Fair Work Agency, with enforcement of holiday pay and better enforcement of NMW obligations of staffing companies and umbrellas – but this may take a year or two to get going properly.

If you would like a copy of the full report, covering the UK Employment Rights Bill and 2024 Budget announcements about NICs and umbrellas, please contact one of the Osborne Clarke experts below.