Franchisees and franchisors should be aware of the changing employment landscape. Sue Tumelty of The HR Dept helps clarify what can be a confusing situation.
Franchisors and franchisees alike will be aware that the world of work is changing. For a number of years now there have been moves in influential circles to make our employment law and taxation system better reflect the modern workplace and the needs of businesses of all types and sizes.
At The HR Dept we have been campaigning for a number of years for the needs of smaller businesses to be included in the debate. We have provided evidence at Parliamentary Select Committee level, discussed matters with the likes of the CIPD and the British Chambers of Commerce, and are actively lobbying to try and influence legislation as and when it develops.
As such, we’re well placed to make sense of the complex situations in legislation and case law and hopefully I can offer you some useful advice here.
The current state of play, in a nutshell
Things began in earnest in 2017 with an influential review by Matthew Taylor called Good Work, which influenced a Government plan the following year to give more rights and protections for atypical workers and help build a fairer economy for everyone.
Meanwhile, in July of the same year the Supreme Court ruled tribunal fees unlawful and unconstitutional, leading to their abolition and a resulting spike in the number of claims brought – something all employers should bear in mind.
Coinciding with the changing approach to straightening out the working environment for our nation’s workforce – notably regarding the confusing categorisation of the self-employed, the employed and ‘workers’ – has been a review of the taxation system.
Many reading this will be aware of proposals to introduce IR35 legislation to the private sector, in a bid to stop the disguised employment of self-employed contractors running their own PSCs or limited companies.
These rules were introduced in the public sector in 2017 and were due to be implemented in April 2020 but this has since been delayed for a further year, due to the coronavirus pandemic.
The delay is welcome as we believe there is widespread unpreparedness for this major change in the private sector, in the small businesses community in particular.
What we believe is desperately needed is alignment of the tax system and employment statuses, before IR35 is introduced more widely. And we’ll be doing all we can to ensure that happens.
As all this is going on society is changing rapidly, even before coronavirus, and in employment law these are being defined by important legal cases.
There has been back and forth in the courts over disputes by those working for Pimlico Plumbers, among private car hire firm Uber (with a Supreme Court ruling expected over coming months), and by Lancashire hairdresser Meghan Gorman, who successfully sued for backdated notice, holiday and redundancy pay from her employer.
All cases revolve around the rights and statuses of individuals working for larger companies and, while the legislators work out how to get the relevant statute book in order, franchisors and franchisees should be aware of the relevant case law and of the risks of getting things wrong.
Our view on things as they stand
While we welcome better rights for workers, we also sound a note of caution to employers be they franchisors or franchisees.
As the legal cases mentioned have shown, the dangers of getting things wrong are huge. The business risks include reputational damage and potentially crippling tribunal costs through rulings which could potentially force backdated payments to an entire workforce.
I suspect the number of businesses which unscrupulously mislead their workforce is extremely small. However, ignorance of the rules is not an excuse and will do you no favours in court. And whereas many employers – particularly smaller businesses – have historically relied on the dubious employment law expertise of, for example, accountants and business advisers, I would recommend that now is the time to start considering professional advice and support. Like many business functions, the costs of implementing proper HR policies are dwarfed by the risks of getting things wrong.
Where we think things should go next
Even before this coronavirus crisis, the world of work was undergoing dramatic change as economies changed their focuses, society adapts to the growth of the internet and a new generation of employees have different expectations.
This pandemic has further accelerated change which was already underfoot – flexible working looks set to become normal rather than the exception to the rule. So I expect activity by our legislature to reflect an entirely different business landscape to that which existed 24, 12 or even six months ago.
I would like to finish on two essential points. First, Government and the legislators should listen to the smaller firms which make up the vast majority of the UK’s business community. So I’d urge you to make your voices heard whenever you can, to play an active role in the debate.
Secondly, I’d like to re-emphasise the point I made earlier – that business owners across the board should keep abreast of the rapidly-changing situation, or risk severe impact on their futures. The worst thing to do is pretend none of this is happening. Your people are your biggest asset and deserve to be treated properly, so we would encourage you to seek advice if you think you need it.
