King’s Speech 2024 threatens labour market flexibility, contractor sector warns

The King’s Speech has got UK contracting worried for labour market flexibility, with Qdos, REC and Professional Passport each concerned.

With 35-plus new bills unveiled yesterday to formally start the parliamentary calendar, it is the Employment Rights Bill unsettling the contractor services trio.

A brief rundown of the full King’s Speech, read by the King but penned by Sir Keir Starmer’s new government, hints at the root of their concern.

'Biggest upgrade of worker rights -- isn't for contractors'

It talks of “the biggest upgrade to workers’ rights in a generation” and, in the speech itself, “a new partnership with both business and working people”.

“Define ‘working people,’” quips IT contracting veteran Alan Watts, a former service management contractors. “I'm guessing it's not us.”

“There is much talk right now and before general election 2024 by Labour about ‘workers.’ And the need to sort out the three-way split between employer, employee and worker.

“It all stems from a paper written by [the then-Labour chancellor who oversaw the introduction of IR35] Gordon Brown, which has not been formally adopted by Sir Kier Starmer’s new Labour government but is informing a lot of their decision-making.”

'Knowledge economy freelancers set to fall between two stools'

Watts says Labour’s “basic plan” (and it is evidenced by the provisions highlighted in the King’s Speech yesterday) is to give temporary workers the same ‘day one’ rights as employees.

“But Labour is also going to define ‘independent’ workers – i.e. the set that don’t need or want workers’ rights and that should include us freelance contractors – as being those running small businesses; basically, those who make things to sell that you can put on a shelf.

 “However, currently, I read it as meaning that us freelance contractors - workers in the knowledge economy of all variations - fall between the two stools.

“The optimistic view is that contractors get added to the pile of independent workers, so at least the no-rights-worker-set would be eliminated. The rather more pragmatic view is that we stay classified as employees who are dodging our taxation commitments; i.e. IR35 with no escape clauses.”

'New deal for working people'

In King’s Speech 2024, the Labour government says it is committed to “making work pay” and so will introduce a “new deal for working people.”

It relates to Labour’s 2021 ‘New Deal for Working People’ which mooted Single Worker Status, but it is exploitation at the fore for the moment.

“[We’ll] legislate to…ban exploitative practices,” says King’s Speech 2024, possibly referring to umbrella companies but not saying so.

The government also used the speech to say it will “enhance employment rights,” seemingly referring to ending ‘zero-hours-contracts.’

'Fire and hire'

It’s a reference, too, to day-one rights, and to ending “fire and hire” – the practice of employers making staff redundant and then re-engaging them.

But unlike the Friday-to-Monday scenario which IR35 tackles, the reengagement is on potentially exploitative terms for the worker.

King’s Speech also says the Apprenticeship Levy will be reformed – a longstanding wish of the REC, but Labour’s other Employment Bill measures - and its tone - are making the agency staffing body twitchy.

'Worried'

“[Companies] are ready to help…[but’ we have to be clear], businesses are worried that the government will rush reforms to the labour market and do more harm to workers than good,” says the REC’s Neil Carberry.

The agency body’s CEO, Carberry cited the National Minimum Wage and Pensions Automatic Enrolment as good examples of what consultation with industry can create.

But as the employment proposals are to become draft laws in just 100 days, observes Susan Ball of tax advisory RSM, there’s concern.

'Changes that restrict choice'

“Flexibility matters to millions of workers across the UK,” points out REC’s Mr Carberry, clearly believing such a reminder to be necessary.

“Changes that restrict choice and opportunity for workers must be avoided as they will undermine both the fight against inactivity and the quest for growth.

“A collaborative approach with business on these policies can ensure changes are grounded in people’s daily lives, so they are pro-worker and pro-business.”

'Broad-stroke approach'

Crawford Temple, CEO of compliance organisation Professional Passport is similarly worried about being left out, in the new government’s rush to legislate (“There is no time to waste” – chancellor Rachel Reeves).

Mr Temple says: “Before they take any course of action I would urge Labour to engage with the experts and stakeholders in the supply chain who understand today’s workplace.

“Protecting workers is to be applauded and it is right that workers are not exploited. 

“However, a broad-stroke approach to banning zero-hours workers needs a careful approach. 

“Whilst exploitation must never be condoned, many workers are happy with the flexibility that a zero-hours contract provides.”

'Zero-rights employment, not zero-hours contracts'

In a summary of the King’s Speech, Labour says: “We will ban exploitative zero-hours contracts, end fire and rehire, and introduce basic employment rights from day one.  

“And through our changes to the Low Pay Commission, we’ll make sure the minimum wage is a genuine living wage.”

But if the new Labour government really wants to support the workforce, the real issue isn’t zero-hours contracts – it’s ‘zero-rights employment.’

Seb Maley, boss of IR35 contract review firm Qdos explains his assessment:

“Contractors engaged inside IR35 are treated as employees for tax purposes, but do not have access to any of the statutory rights or protections that employees do, leaving them at a considerable disadvantage to other workers.”

Maley says the contractor industry will therefore be hanging onto a promise to “consult in detail” on the introduction of a Single Worker Status.

'Regulation of the umbrella industry'

He’s not alone in having to cling to Labour’s past promises to see a “glimmer of hope” for atypical workers like contractors.

“With a new government, there was always a glimmer of hope that this time they may actually come forward with proposals for regulation of the umbrella industry,” says Clarity Umbrella managing director Lucy Smith.

“But as the King’s Speech showed we [in the umbrella industry] have been pushed back into the shadows again.

“The only positivity from the speech [seemingly relating to umbrella company contracting] is the government’s legislative statement of intent to ‘ban exploitative practices.’”

'One-size-fits-all approach won't work'

Similarly not mentioned in King’s Speech 2024 but contained in the party’s 2021’s New Deal for Working People, is a vow to introduce a “simpler framework that differentiates between workers and the genuinely self-employed.”

As to what King’s Speech actually contains for the labour market,  IR35 reviewer Mr Maley sees enough red flags to justify the beady eye which both REC and Professional Passport suggest is warranted.

“Ultimately, the devil will be in the detail,” Maley warned last night. “The government must strike the right balance. When it comes to employment rights, a one-size-fits-all approach won’t work, with many genuinely self-employed workers valuing their independence.”