Smarter Regulation plans ‘long overdue’ for temporary workers

Fresh UK government proposals to reduce the administrative burden of calculating holiday pay for temporary workers have been hailed as potentially “life-changing” for the contracting community.

Part of a wider initiative announced by the Department for Business & Trade this week (May 10^th), the proposals would see the introduction of “rolled-up” holiday, allowing workers to receive holiday pay with every payslip instead of it being left unclaimed.

“Lawfully rolling up holiday pay is long overdue,” said Fred Dures, founder of specialist payroll auditor PayePass. “For far too long, temps have lost out when it comes to claiming holiday pay and worse off financially as a result. It’s no overstatement to say that it will prove life-changing for many of the UK’s temporary workers.”

In practice, the move would involve a removal of retained case law from the EU-derived Working Time Regulations. Dures explains that these regulations currently allow umbrella companies and recruitment agencies to profit when temporary workers forget to claim their accrued holiday pay entitlement.

“Some make it deliberately difficult for their temps to claim accrued holiday, imposing complicated terms and deadlines so that they can profit instead of paying workers what they’re due. What’s needed now is an imminent roll out so that dodgy practices can stop, and contractors receive their full entitlement.”

‘Punitive’ contracting legislation

The Smarter Regulation paper goes on to note that the Working Time Regulations are placing “disproportionate burdens on business”, arguing that their reform will save businesses £1bn annually through reduced reporting requirements, and aid the pursuit of economic prosperity.

This is echoed by Dave Chaplin, CEO of IR35 compliance firm IR35 Shield, who welcomes the proposals and says that temporary workers and the businesses that engage them both stand to benefit from the initiative.

“The red tape and regulatory legislation that has been imposed on self-employed workers over the years, and in particular, the punitive IR35 legislation, has simply served to strangulate the UK’s flexible economy and punished contractors and the firms that hire them,” he says.

“We need tax certainty for contractors and businesses. This will enable hirers to gain frictionless access to the talent they need when they need it, without risk.”

‘More work needs to be done’

The Smarter Regulation paper argues that Brexit and the sunsetting of EU legislation has opened doors for the UK to deploy regulatory reform and drive economic growth. Businesses being “tied up in red tape” limits their ability to innovate and hampers national growth prospects, it says.

But according to Matthew Lesh, director of communications and public policy at libertarian thinktank the Institute of Economic Affairs (IEA), much more needs to be done to decrease the red tape burden strangling British businesses and pushing up consumer prices.

“The sunsetting of EU law by the end of the year has backfired for regulatory reform advocates. It led to busy work just to maintain the status quo and created substantial uncertainty.

“New legal principles like ensuring regulation is a last resort and that costs are properly calculated could help turn the tide on efforts to increase the regulatory burden. It is also sensible for regulators to have an explicit innovation and growth objective.”

IEA labour market expert professor Len Shackleton also praised the government’s proposals, arguing that consumers may also see the benefits of the £1bn saved from reducing the cost of employment regulation.

“Most economists agree that the cost of employment regulation does not ultimately fall on profits, but is passed on to consumers through higher prices and to workers in terms of lower pay than might otherwise be the case.

“So, it follows that the estimated savings of £1 billion from regulatory reform will ultimately benefit a wider constituency than business owners. More of the same please.”