On July 4th 2024 the UK voted in a new Labour government with a large majority. As the country transitions from a Conservative government to a new Labour government, many across the country will be wondering how their lives will be impacted, including contractors.
In this guide, Umbrella Search takes a closer look at new policies that will be introduced by the new Labour government and what this means for contractors.
IR35
IR35 is a hot topic for contractors. With the current IR35 legislation causing problems for thousands of contractors nationwide, many have hoped that recent and incoming governments would address the problematic legislation.
However, Labour did not mention IR35 in their manifesto and have not mentioned it since they came into government.
For contractors this means that they can expect IR35 to remain the same at least for now.
Plan to Make Work Pay
Although Labour haven’t mentioned IR35, their new Plan to Make Work Pay initiative looks to bring significant changes to workers in the UK. Focusing on providing more security for workers, increased fairness, more rights as well as increasing the minimum wage and banning zero hours contracts.
The plan aims to move towards a single worker status, simplifying the current system of employment which has three tiers. The aim is to bring more clarity to employment status, helping workers understand their rights and for businesses to meet their legal obligations more easily.
But what does this mean for contractors?
This will hopefully mean that the government will define genuine self-employment, meaning that contractors can operate as classified self-employed people without worrying about getting caught out by IR35 and being classified as disguised employees, meaning this could be great news for contractors.
More rights for employees
For contractors that operate under an umbrella company, the good news is that Labour have pledged to introduce additional employee rights.
This includes the likes of day one statutory sick pay. This means that if an employee becomes too ill to work, they will be paid for the first day they miss of work, rather than the third.
This will impact contractors that work through an umbrella company who are entitled to such benefits giving them a greater level of security.
More rights for the self-employed
As well as setting out clear definitions of workers and increasing employee’s rights, Labour are also introducing more support for the self-employed. They have promised to bolster the rights of the self-employed, including introducing the right to a written contract and increased protections against late payments. After all, every contractor knows that one of the biggest downsides to contracting can be the risk of late payment which can cause issues with cashflow.
This is a big problem for contractors, freelancers and the self-employed, who the IPSE estimate are waiting on an average of £5,000 in unpaid invoices per person.
Responding to these concerns, the Labour government have promised to help tackle late payments which they claim will unlock £20bn in late invoices.
This is good news for self-employed contractors, meaning they have more rights when it comes to working with clients, and can rest assured that they will have more protection should the client not pay up in time.
This will help with both security and cashflow for self-employed contractors.
What’s more, Labour have vowed to give self-employed workers the right to a written contact. This means that when taking on a new contract the client will need to set out a contract that clearly outlines the payment deadlines, scope of work and what will happen if either side fails to meet these terms.
In work protections
The new Labour government have also introduced new in-work protections for the self-employed including contractors.
They have committed to extending health and safety protections to the self-employed, as well as expanding protections around whistleblowing and blacklisting. The self-employed, including contractors, may find it difficult to speak up against malpractice they’ve experienced or witnessed at work, and this can lead to them losing the contract or being shoved out of the industry more widely.
Although the details aren't yet clear, Labour wants to provide more protection and safeguards in this area.
Green economy and energy initiatives
The new Labour government have laid out a commitment to a zero-carbon electricity system by 2030 which includes targets for solar, offshore wind, onshore wind development and the creation of Great British Energy which will be a publicly owned company that will invest in clean energy.
With this, new jobs and opportunities are set to open up, and contractors are poised to find new opportunities within these emerging markets.
Use Umbrella Search for the next steps
Although it's great news for self-employed contractors that Labour have pledged to increase certain rights for these workers, there are still questions around the re-defining of workers and what this will mean for the self-employed.
If this ambiguity means that you consider the umbrella company route the better option, Umbrella Search is here to help.
After all, with an umbrella company, the contractor is automatically employed and therefore eligible for statutory rights including the now improved statutory sick pay, as well as benefiting from receiving a salary, not having to worry about late payments as the umbrella company sorts this out, and having a stress free time when contracting.
If you’d like to find out how you can take the next steps to finding an umbrella company that’s the best match for you, look no further. The team at Umbrella Search will work with you closely to find out what you require from an umbrella company and find you the best fit.
Simply get in touch with the team today and take the next steps to boosting your contracting career.
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