Workplace Report (May 2021)

Bargaining news

Changes could hit contractors, union warns

Contractors, people who work through an intermediary to provide services to a client, are covered by the off-payroll working rules (IR35). Changes introduced last month could lead to higher taxes and reduced take-home pay (or fewer contractors being employed) without any additional employment protections in return, the Community trade union has warned.

Under the 1999 rules, contractors are either “outside IR35”, or “inside IR35” – in which case they pay more income tax and national insurance, as if they were an employee.

What changed last month was the responsibility for deciding whether someone falls into the IR35 rules or not (the rules changed in the public sector in 2017). Previously, contractors themselves were responsible, but now that decision is taken by the client or “engager”.

Although contractors do often pay less tax than employees, the union acknowledges, they also get significantly fewer benefits.

This information is copyright to the Labour Research Department (LRD) and may not be reproduced without the permission of the LRD.