The consultation, which is jointly led by HM Treasury, HM Revenue & Customs (HMRC) and the Department for Business, Energy and Industrial Strategy (BEIS), follows Matthew Taylor’s review of employment practices which was published earlier this year.
It will explore “the case and options for longer-term reform to make the employment status tests for both employment rights and tax clearer,” according to yesterday’s (22 November) budget.
It said: “The government recognises that this is an important and complex issue, and so will work with stakeholders to ensure that any potential changes are considered carefully.”
According to a spokesman for the Treasury, the consultation will be launched either at the end of the year or at the beginning of next year.
One of Mr Taylor’s conclusions was auto-enrolling self-employed people into a pension through the self-assessment tax process would help to deal with the issue of this type of worker failing to set cash aside for retirement.
Providers Aviva and Royal London have suggested a similar possibility, including the chance for the self-employed to opt out of the contributions.
According to figures from Now: Pensions, workers in the gig economy could be missing out on £182m of employer pensions contributions annually.
Dan McLaughlin, head of public affairs and international at Smart Pension, said: “We think that it’s about time that self-employed get equal worker rights and status, and we need that for auto-enrolment.
“We need to change some of the [auto-enrolment] rules, such as the £10,000 earning triggers and allow multiple jobs to be aggregated to be eligible for auto-enrolment.
“It should trigger other things - self-employed people should be included in the scope of the national minimum wage, and the national living wage.”
According to Smart Pension, more than 60,000 gig economy workers could begin to save for their retirement via workplace pension schemes if self-employed contractors are awarded employee rights.
The workplace pension provider based its findings on worker numbers available from Uber, Deliveroo, Hermes, Yodel and UK Mail, but believes if cleaning contractors and employment agencies were affected, the numbers brought into saving could triple.
The Taylor Review was commissioned following concerns about the changing nature of the workplace, with increasing levels of self-employment and part-time working and the rise of the so-called "gig economy".
Chancellor of the Exchequer Philip Hammond attempted to address this issue earlier this year by increasing National Insurance contributions for the self-employed but ended up having to make a U-turn just a week later after the move became mired in criticism.
When he published his report, Mr Taylor supported Mr Hammond's proposals, saying the government should move towards taxing individuals in broadly the same way, regardless of whether they are self-employed or employed.
Meanwhile the Work and Pensions and the Business, Energy and Industrial Strategy committees published on Monday (20 November) a joint report and a draft bill to “close the loopholes that allow companies to use bogus ‘self-employment’ status as a route to cheap labour and tax avoidance”.
Giving employees a presumed ‘worker by default’ status would help ensure firms are not exploiting staff for cheap labour, the document stated.
This would require these firms to prove their workers are self-employed, reducing the number of staff enduring the “unacceptable burden” of expensive and risky court cases to obtain their rights, according to the report.
maria.espadinha@ft.com
