A contracting future?

The UK arguably leads the world in the use of temporary workers, ‘atypical workers’ contracts and casual workers. But the European employment law framework struggles to keep up, and often attempts to ban or limit these relationships in favour of the more traditional employment model. Recent consultations on ‘improving’ temporary employees’ rights (http://www.berr.gov.uk/consultations/page51233.html), and removing VAT inputs on temporary staff, have deformed the UK market .

In the long run, the lack of long term mutual obligation between end client and worker that is at the heart of the British temp market may turn out to be closer to the long term model for many workplace arrangements in many sectors.

The future generation of workers will not recognise the current UK employment law framework, rooted as it is on the older “master and servant” framework of the 19th century. Whilst the 19th century model has survived, with modifications, through the 20th century, it is arguable that it will not survive in its current form as the 21st century unfolds.

The heart of the master and servant contractual tradition is rooted in the notion of mutual duties – the ‘master’ to provide safe working conditions, pay for the work, and the servant to work for the money and to serve loyally. Those concepts still operate at the heart of the contractual relationship between employer and employee.

Modern concepts of the employer-worker relationship are based on European traditions of “rights”, and modern legislation tends to focus on granting and securing workers’ “rights”. The legislators on both sides of the Channel continue to ignore protections for the employer, and “managers’ rights” continue to derive from the old common law concepts of “duties”, and good contract drafting.

Workers’ rights start before employment, and extend not only to the employed but also to “workers” – individuals who are personally obliged to provide a service. So the line between an employee and a contractor is becoming ever more blurred. And the taxation of the self employed contractor on a PAYE basis is another step reducing the independence of what once was the journeyman class . This independence has been exchanged, involuntarily, for protection from ‘discrimination’. The increasing state intervention deprives companies and individuals of options . It is no longer enough for the two to agree the individual is self employed – the state will take its own view and enforce it.

This leads to an interesting dilemma in the workplace – how to manage individuals who do not want to be employees in terms of obligations (or tax) but are nonetheless accruing workplace rights.

And “contractors” are not the only ‘conscripts’ in the employment ranks. The increasing application of TUPE (Transfer of Undertakings (Protection of Employment) Regulations 2006) to changes of service contracts means that employees are finding themselves working for employers who never recruited them .

HR’s recruitment role used to be confined to the recruitment of employees, and the booking of agency workers, as appropriate. As service provision becomes the mainstay of many modern organisations, HR’s role needs to change, to align more closely with procurement (for contracting out and changing contractor services), with sales and marketing (for selling contracted services and TUPEing in), and with finance (for budgeting labour and residual costs) in new ways.

HR needs to add value by adopting suitable (often multiple) methods of contracting with individuals, inducting and motivating ‘conscripts’, and supporting line management towards understanding, managing and succeeding in the new environment.

Employment law can be a useful way of looking at the issues, but only if it is overlaid with a clear understanding of commercial and organisational needs .

If you would like a free one to one chat I would be happy to organise a webinar to help you map your own organisation against these issues .

Email info@irenicon. co.uk headed MAP so we can arrange a suitable time for your free webinar. Follow me on twitter www.twitter.com/annabelkaye

Annabel Kaye is Managing Director of Irenicon Ltd, a specialist employment law consultancy. Tel: 08452 303050 Fax: 08452 303060


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