Will the biggest shake-up of employment law in decades affect the self-employed?

Tuesday 30 April 2013

The Enterprise and Regulatory Reform Bill received Royal Assent a few days ago containing some of the most dramatic changes to employment law in several years. Although the controversial ‘rights for shares’ scheme has been taking up most of the column inches, the new law comes with a range of measures designed to change the way British workers go about their jobs. But will it have any impact on self-employed professionals?

A number of provisions in the legislation are aimed at companies with multiple owners, such as giving shareholders a voting stake in the salaries offered to directors and the scheme allowing workers to trade in some employment rights for shares in their employers. Of course, owner-managed limited companies will not fall under this scope.

Measures directly affecting the hiring and treatment of staff could potentially bear on contractors who choose to become employees of an umbrella company, but these rules are unlikely to make a profound impact.

For example, one of the biggest changes is the shake-up of the employment tribunal process. The Advisory, Conciliation and Arbitration Service is likely to play a bigger part, as the government encourages more workers with grievances to settle their disputes earlier without the need for a costly and time-consuming full tribunal process. But given the relatively small proportion of workers who currently take a case to a tribunal, it is likely that uptake among the small proportion of the UK workforce acting as contractors will be negligible.

But the act will affect contractors directly as it impacts the industries in which they work. Firstly, the act presents some major changes to copyright law which have seen freelancers in the creative industries voicing serious concerns about the licensing of their own work once it is posted online. Photographers, designers and illustrators have been among the most vocal critics of the law from day one, with many sharing the common belief that the bill puts their livelihoods at risk. 

Meanwhile, a number of changes will be made to regulations in a range of industries under the governmental Red Tape Challenge. The scheme is run by taking different industries in turn and opening the full list of regulations out to public consultation. Once businesses and individuals have discussed the relevance of every rule, ministers must make a case to keep them - if they are unable to do so, the rule is repealed. Health and safety is set to see some of the biggest changes, meaning that freelance consultants in this area will be among those making adjustments.

Contractors working in the renewable energy field may well see the benefits of a renewed commitment to the Green Investment Bank. The government is given powers under the Act to provide £3 billion as an initial investment, between now and March 2015, with more expected to follow. In the long term, entrenching the bank in law will make sure that it only ever funds the ‘green economy’. Increased investment and development of the green economy can only benefit contractors.

The new legislation seems to be a mixed bag for contractors and freelance workers, but the real impact may not be seen for some time as industry adapts to the changes.

By Victoria McDonnell

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