Taylor review could result in UK employers paying NICs for GIG workers

But the Low Incomes Tax Reform Group warns the government to level other areas of the employment playing field or risk organisations using ‘flexible’ working options to protect their profits.

A combination of recommendations in the Taylor Review could result in more UK-based gig economy workers being treated as employees for tax purposes, which would make their hiring companies eligible to pay national insurance.

According to the Low Incomes Tax Reform Group (LITRG), there are three recommendations that make such a scenario likely – the Review recommends that:

1. The burden of proof in employment tribunal hearings where status is in dispute could be reversed so that employers would have to prove that individual workers were not entitled to employee or ‘dependent contractor’ employment rights rather than the other way around;
2. More emphasis should be placed on the concept of control and less on personal service when deciding on ‘dependent contractor’ status;
3. The government should consider how tax tribunal and employment tribunal rulings could be applied across jurisdictions.

Even if gig economy workers were genuinely self-employed, the Taylor Review report advocates that the government explore ways in which the tax system could address the current disparity between how much tax is paid by employed and self-employed labour.

But Robin Williamson, the LITRG’s technical director also warned that, in the wider context, it was important to “consider levelling other areas of the playing field, otherwise engagers may simply turn to different ‘flexible’ working options to help protect their profitability”.

The root of the problem, he explained, was that employers only had to pay national insurance contributions to employees and only if they are paid above a weekly threshold of £157.

“Therefore, even if the Taylor report recommendations result in gig workers receiving certain employment rights and a secondary contributor, there will still be attempts to circumvent the rules – for example by the use of short hours contracts – and rather like a cork in water, problems of insecurity for workers could just bob up elsewhere, which would be unfortunate,” Williamson said.