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REC, PCG Highlight Dangers Of New Self-Employment Restrictions

Manchester bridge

Two leading professional organisations have expressed concern over HMRC proposals that would restrict self-employment. In a letter addressed to Chancellor George Osborne, the Recruitment and Employment Confederation (REC) and the Professional Contractors Group (PCG) warned that the Onshore Employment Intermediaries legislation poses a danger to job creation and economic growth and said that its implementation should be delayed to provide businesses with more time to adjust to the changes.

Starting from 6 April 2014, self-employment will no longer be an option for independent professionals securing work through an employment agency. According to the REC and the PCG, this will have a number of negative consequences, one of them being impaired flexibility in the labour market. The organisations also estimate that the changes would increase costs for employers by up to 25% and they point out that the impact would be particularly damaging for vital growth sectors of the UK economy such as construction, engineering, IT and oil & gas.

Commenting on the legislation, REC chief executive Kevin Green noted that businesses have been given very little time to react adequately to the changes. The new rules are about to take effect but employers are still waiting for the government’s final guidance, Green said.

“The organisations also estimate that the changes would increase costs for employers by up to 25%…”

The lack of proper guidance was also highlighted in comments by Simon McVicker, PCG’s director of policy and public affairs. HMRC has failed to provide freelancers with the assurances they are seeking and the lack of clarity will only lead to confusion, he said. As a result, the new rules could be wrongly applied to bona fide contractors using limited companies. It is necessary to delay the implementation so that the new legislation is clearly worded and properly understood, McVicker added.

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