Europe inches closer to insisting gig workers are treated as employees Millions of contractors for digital platforms – often referred to as gig workers – may soon be classified as employees in the European Union. The European Council and the European Parliament on Wednesday announced a provisional agreement, after two years of negotiation, designed to clarify the employment status of such workers …
"No competition = more freedom to screw both workers and consumers."
That should not be true as controls, regulations and legislation, has been around for decades regarding this. For example, the very thing that the article is about: employee rights. The current ride services must abide by the existing rules, it is these "disruptive" newcomers that think they can skirt the regulations by playing word games on employee classifications.
Taxis, IFAIK, never had 'surge pricing'. For example, in several large American cities, taxis have been given a fixed charge from midtown to the airports. Can drivers try to charge more? Yes, but then they're breaking the law and, if reported or caught, face fines. Uber surge? How much you willing to pay??
Nonsense. In the UK they can hire self-employed workers on "inside IR35" contracts and legally bypass employment laws.
Taxis, IFAIK, never had 'surge pricing'.
Price controls never work though. Consumer always ends up paying more.
That said with taxis, you could always tell the driver to turn off the meter and agree fixed price beforehand. At least that's what was up when I was using Taxis.
I am on your side. No matter what the legislature states in it's words, entry conditions favour the big players. They can afford the costs of doing it. Imagine applying for a small project as an individual. Total size, maybe £15M. Now imagine the costs of bidding; this is just a guess but I suspect you must include:
Equal opportunity compliance proof.
Gender reassignment policy proof.
All of the green requirements including
* Disposal of waste products policy
* Costed global warming impact statements
* Policies w.r.t. employees who are whistleblowers about breach of any policy
* 3 years audited tax returns as a small enterprise
Proofs of (if you are a small team of 3-4 people making a "we can do this bid, and we should do it cos it is important):
* 3 similar projects performed with full washups on how it was done and the top 3 catastrophes in each project:
* these as usually something like "We got Earl Grey tea, rather than English breakfast"
* Mr. Jones didn't particularly work well with us but we learned to get along
Suboptions
a) He died of old age.
b) We came to a mutual understanding (no comment at all about how this happened)
c) After a while he was moved and his replacement was really motivated to finalise the solution (no comment at all about how this happened).
d) The project was not as successful as we had originally projected but with the institutionalised and localised hostility it can be seen that our success was particularly noticable
And so on and so on.
And now you are a big firm like Crapita wanting to ensure you keep the small jobs because:
* They are relatively easy
* They are relatively likely not to fail
* There are a lot more of them
* And once we are in their, we are in.
* And we have a shed load, a garage load, and a green house load of ex civil servants, who spent years designing these barriers to entry, and for a small cost to us, can negate the barriers with a magic wand of knowing what is wanted. (Don't waste time answering the questions, just include all this shit from here, here, oh, and most importantly here. Don't worry about what it says; as long as it ticks the right boxes, no-one will check anyway.)
* And, of course, finally, here, cut and paste it from our previous 321 applications last month.
I don't know the answer, but I do note that regulatory barriers tend to increase, not decrease. And this ensures that new entries can be crowded out.
There's always been competition for private hire services, which is what Uber provides. Taxis are considered in many countries as part of public transport and regulated accordingly. It's true that in some countries, restrictive practices such as the artificial limit of licences apply but the solution to that is simply to change the practice.
Somebody ALWAYS has to subsidize low qualified workers. By definition 50% has below average skills and IQ. Many of those would be unemployable in free market.
Socialists chose the business to subsidize them. But this distorts market dynamics, supporting jobs nobody needs and vice versa.
In the end the upper 50% has to pay for additional benefits to those below by proper taxation. It would also help to considerably cut governmental free loaders mostly responsible for wealth redistribution or providing no useful service. As Javier Milei proposed, for example by slashing 80% of ministries etc.
By definition 50% has below average skills and IQ.
This canard again.
This is only true if by "average" you mean "median", or you have a distribution that happens to work this way. If by average you mean "arithmetic mean" or "mode", then your distribution may very well have more entities on one side of the average than the other.
And, of course, IQ is of debatable value, and there is no generally-accepted quantitative measure of "skills" (much less one that yields a single real number), so "average skills" is a meaningless phrase.
Perhaps if you understood the most basic matters of statistics you'd have a stronger argument.
If we're getting annoyed at common misinterpretations, I can complain about people who assume that average is supposed to mean the mean and complain when people use it otherwise. For example, when discussing IQ which is specifically built around the median, average probably does refer to the one that's intrinsic to the measurement, as useless as that measurement is. When not using such a measurement, the meaning of average is not clearly defined, but in informal speech it is more likely to refer to a combination of median and mode than to the arithmetic mean. That doesn't make their point any more useful or less cliched, but I'm afraid your rejoinder is pretty cliched as well.
Oh no not the "Legitimate Interest" defence. I always hate that websites with cookie banners have a "Legitimate Interest" section for ads and tracking, like what possibly could be in legitimate interest about that. Are you just trying to confuse me (or cover your ass?) or is there something you think you have legitimate interest for.
/rant
I agree with you entirely - if it really is legitimate (ie. necessary for the operation of the website, or provision of the goods or service provided by the website) then the law permits them to capture the information without needing to ask your permission. If they need to have your prior consent, it isn't legitimate QED.
Yeah, however the "Legitimate Interest" allows them to make it opt-in by default (at least from what I can tell), even when you click "reject all".
For example, sussex live (I've seen it used as an example previously) has the following for legitimate interest under "Use limited data to select advertising (155 partners)":
> Advertising presented to you on this service can be based on limited data, such as the website or app you are using, your non-precise location, your device type or which content you are (or have been) interacting with (for example, to limit the number of times an ad is presented to you).
Among various other "legitimate interests", of course. Because why should it be simple?
Obviously, this is more limited than the easier to reject (but still not compliant as it's not as easy to reject as accept) advertising general section where they use more invasive parameters, but I do wonder if this really qualifies as a legitimate interest or if they're just doing it until they get slapped (or probably not as the ICO seem like a wet blanket oftentimes).
That just turns it into a straight up GDPR violation, so I do how someone eventually gets legally bitchslapped over it. Until that time, we'll have to suffer with manually disabling everything. I don't trust the "reject all" button anymore after finding out they decided "legitimate interest" meant "do whatever the frig you want but we'll call it legitimate"...
Frankly, I'm unable to conceive of a technical justification for mandatory cookies at all. During a session, requests can carry a session identifier by annotating href and XHR request-URIs with query parameters, and forms with hidden form fields, simply by injecting those when serving content. PHP has had support for doing this for many years, and that's as low a bar for an HTTP content-generation system as I can think of.
Across sessions, cookies support implicit authentication, but that's a user convenience, not necessary.
Cookies are a crutch, for any request where the server has control over the Request-URI or the body, and that's nearly everything. Non-browser UAs for custom applications could inject their own headers. Cookies ought to have been deprecated long ago.
"During a session, requests can carry a session identifier by annotating href and XHR request-URIs with query parameters, and forms with hidden form fields, simply by injecting those when serving content."
That is very easy to break. For example, if this is an online store and I've sent you a link to an item in the store, but you already added items to your order, then using my link will not retain your session identifier and you'll lose your progress. Weirder things might happen when people unwittingly include their session identifiers in links sent to others. Probably most of them will have expired by the time anyone uses it, but there's a chance that if Alice shares a link and Bob clicks it right away, Bob might find himself having more access to Alice's account than Alice had planned. Ways to work around this are of course possible, for example embedding an IP address in a session token and invalidating it if a different IP address is used, but that would risk having a leaked session token including personal information and would now mean that a user on a laptop or mobile device finds themselves losing stored progress when they move to a different network. There is a pretty good reason for not including session-specific data in URLs, and if you're not putting it there, then it has to go somewhere else.
Germany already has a fairly simple law against fake self-employment.
One of the main criteria is if over 80% the income is from one "client" then you're actually employed.
They do properly enforce it, with not just a fine but also back-pay of all social security contributions for the employer.
No chance this side of hell freezing over that the UK will introduce similar legislation.
This would completely screw deliveroo over where you can actually, as a worker, have anyone work for you! The person that appears on the app as your delivery person may not actually be the person that arrives at the door
Will also screw up Amazon too, but I'm happy with that
But that's mostly because it means Deliveroo doesn't have to (pay to) vet (or take responsibility for) the actual workers. It means they can point to the one person they have the contract with and go: "Nope, deal with him". Which makes compliance checking or finding who the jackass was that assaulted a woman when delivering their food extremely difficult.
I also don't see how it would screw them here. Would just mean they have to actually hire people correctly (and know who they are) or make sure their drivers all get no more than 80% of their income from Deliveroo or Amazon. Especially companies like Deliveroo and such could very easily put that in their contracts and ensure that they allow/encourage drivers to work for other companies as well. From what I've seen most drivers are already using multiple delivery gig-worker apps at the same time (something most actually forbade in the past).
"One of the main criteria is if over 80% the income is from one "client" then you're actually employed."
I doubt it's as simple as that. On that basis if a plumber comes to service your boiler then unless he's somehow simultaneously getting at least a quarter of the amount you're paying him from somewhere else he's your employee at the time. If a jobbing gardener spends a whole day working on your garden is he getting the equivalent of quarter of a day's gardening pay somewhere else?
Like you, I doubt this sort of legislation would be introduced in the UK. The equivalent already exists here: it's called IR35. It means that HMRC can take their pound of flesh from the individual worker, no need to take on larger businesses who might be better equipped to fight back.
If said plumber is registered, he already has a company. If he DIYs for you, he'll be DIYing for many other people if he is to make ends meet.
Not sure that simile applies. Unless said plumber is actually offering his services on PlumbersRUS, and you subscribe to get his service which PlumbersRUS oversee and guarantee their prices, paying a part to said plumber who also subscribed to get the gigs.
Then yes, but otherwise, not really.
I think.
" On that basis if a plumber comes to service your boiler then unless he's somehow simultaneously getting at least a quarter of the amount you're paying him from somewhere else he's your employee at the time. If a jobbing gardener spends a whole day working on your garden is he getting the equivalent of quarter of a day's gardening pay somewhere else?"
I'm not sure of the details of German law, but it's pretty obvious that such an 80% limit would be based over a longer timespan than a year or a week. For the vast majority of typical gig contractors (basically tradesmen, delivery people, Uber drivers, care assistants...) they will work for multiple clients in a year (the only exception I can think of is building contractors as building can take on the order of a year).
IT contracting is a funny beast because many IT projects are multi-year, and therefore it can be perfectly normal for a true self-employed contractor to work for a single client for years. So it's difficult to come up with a set of rules that say Uber drivers are employed by Uber but the guy contracted to build someone's backend application for company X isn't an employee of company X. It's not an easy solution.
What is sure is that kludges like IR35 that make contractors take all the obligations of employees but none of the benefits are rubbish.
IR35 only applies if the service is performed by a worker who has financial stake in the company he or she works through.
Which in itself tells you how ridiculous this is and in reality it has nothing to do with employment / self employment.
It has been created to stop best workers from leaving big consultancies and starting their own competing business. Any service based start up would have work performed by owners in its growth phase. So this regulation actually restricts starting up in that sectors and makes it only possible for the rich, who can hire people outright and don't get involved in actual work for the clients.
When people say that someone next to them should be taxed as an employee, don't realise that the consultancy they are hired through charges £1000-2000 per day and worker only makes £60k a year.
"I'm not sure of the details of German law, but it's pretty obvious that such an 80% limit would be based over a longer timespan than a year or a week."
Exactly. But how do you define the timespan? The average MP or equivalent can envisage having work done by a plumber or a gardener. A timespan that's substantially larger than those sort of jobs that would seem OK to them, not least because they can engage tradesmen without the slightest risk of being seen as employers in such situations.
But it comes down to the timescale of the job. What's long enough to span multiple jobs for the sorts of things they can envisage isn't necessarily long enough to span even a single gig working on a development project.
This whole issue of IR35, gig-workers etc. springs from a failure to define work being done as a business. The tests in IR35 are based on "do these circumstances look as if they could be employment?" without asking "do these circumstances look as if they could be a business arrangement?". If there were clear tests to define work being done as a business then it would be possible to turn things around - if the test fails it's a contract of service and the worker is an employee with full employment rights (and obligations on the employer to deal with tax), if it passes then the contract is a contract for services and there are two separate businesses neither owing the other anything except what the contract specifies and each dealing with TPTB about their own tax.
This whole issue of IR35, gig-workers etc. springs from a failure to define work being done as a business. The tests in IR35 are based on "do these circumstances look as if they could be employment?" without asking "do these circumstances look as if they could be a business arrangement?"
That said, this shouldn't only focus on micro / small business, but should be expanded to all service based businesses if we are to aim for level playing field.
If a big consultancy sends in a worker that for all intents and purposes works as if they were employee of the client, big consultancy should be on the hook for PAYE applied to their contract with the client, just as small business is when the client errs on the safe side and declares it in-scope.
"If your plumber is spending 80% of their year servicing your boiler you probably need a new plumber!"
The period over which the 80% is reckoned was not specified.
In fact it is critical. What's a reasonable length of task for a plumber falls far short of that for the sort of task for which an IT developer, for instance, might be engaged on a project.
If you define the measurement as being over a month, or a quarter, or a year - you will arbitrarily turn some tasks into employment and some into business contracts. 80% of such periods might sound a reasonable criterion, especially to the individual legislators who will recognise the need for a jobbing plumber's services but wouldn't see themselves as employers in such circumstances. They won't, however, envisage circumstances in which they'd engage someone for the longer periods which are the basis of a jobbing IT developer's life.
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It's ONE of the main criteria used to judge whether a pay construct COULD be deemed employment, not the only one, as mentioned by others. So no, it's not irrelevant, certainly in Germany and afaik similar rules exist in most of Europe. Just because the US and UK decide to be backwaters doesn't mean the rest of the world isn't trying to prevent offloading tax and social responsibilities through mock "self-employment". Because things like: "You'll drive for us delivering parcels wearing our uniform (that you have to buy from us), at the time we schedule you, using a vehicle YOU provide and pay for but WE must approve and that must have our stickers (that you have to buy from us), you're not allowed to deliver parcels for anyone else using the same vehicle, you're not allowed to perform any other job or function than delivering for us with that vehicle, you have to drive according to the route we stipulate" is NOT self-employment. That's just tax and responsibility dodging.
This is very squarely aimed at gig work and the VAST majority of it is extremely exploitative.
80% is too vague.
I'm a self employed consultant working through a ltd company in the uk.
My largest customer is normally about 40% of my turnover. In the past, I used to sell software too. A large order could easily take that 40% to 85%. Nobody doubts my self employment.
I'm a self employed consultant working through a ltd company in the uk.
Which means you're technically not self-employeed, you're an employee of the Ltd company. Which in German system would mean the company is paying the necessary social security and taxes and so absolutely no problem.
Nobody doubts my self employment.
You no longer have a control over that since the rules have changed. It's the client who decides whether you are self-employed or not, or if you are running legitimate business. Given that there are severe penalties for getting this wrong, unless you work in a niche market with low supply of talent, most companies take the safe route and declare all their suppliers as deemed employees.
You can have your own office, accountant, website, equipment, insurance, assistant, hiring other people and whatnot, but if you perform the work as an owner of the business the client can always decide you are a deemed employee and not really running a business.
So, IT Contractors should not exist in this scenario?
I've been working for the same "client" on several projects for the last year now. I know this is not the same as a "gig worker" but if you go by a lot of the criteria, then I actually do. Also, if I took on a contractor to help me convert a barn, for example, and gave them 18 months of work (which I will be supervising, directing and controlling - I'm not going to just let them build it how and when they feel like) then am I supposed to "employ" them? Pay their pension? Give them sick pay? Make them redundant at the end of the 18 months? It's all a bit of a mess.
So, actually it IS difficult and blanket rules like this just catch people like me who are quite happy running a business and working for someone for 3 / 6 / 12 months at a time.
This is pure and simple gaslighting from the corrupt government.
If someone has a business, I don't know - making precision gears and happens to only have one client in the area, nobody is saying that said business should close and all its workers should become employees of their main client. That would be insanity.
But somehow, when an individual wants to perform the same business model as a big consultancy, it's suddenly not a business. It's only a business when big consultancy does it!
It doesn't matter that their workers work effectively as employees of their client and work for their client for years.
It's interesting, because IT people seems to be largely smart, but they don't see how their career prospects have been limited and they cheer for it! ;-)
The period for income source is a year.
There are other criteria (as an AC above correctly comprehended) which will be looked at in the case of long-term projects.
If you can read German or are capable of using a translation service this article gives an overview:
https://www.scheinselbststaendigkeitstest.de/de/ressourcen/scheinselbststaendigkeit-kriterien-checkliste
> which I will be supervising, directing and controlling - I'm not going to just let them build it how and when they feel like
Funnily enough one of the other criteria is how much freedom the freelancer has in undertaking their work. If you act like a boss, you're an employer. Please pay in to the social security system (alternatively the contractor is employed by a contracting company which already is).
> So, IT Contractors should not exist in this scenario?
Of course they do. They're employees of the outsourcing company.
"Funnily enough one of the other criteria is how much freedom the freelancer has in undertaking their work. If you act like a boss, you're an employer."
Exactly as it should be. If your "freelancer" is being lorded over and told exactly what to do, when, and how, you're an employer regardless of the fact that you're 1099'ing him/her just to avoid having to pay your share of the wage taxes.
It's a game that many employers want to try to play and we need to stomp it out. They want to declare a worker "independent" to dump the responsibility of the full tax burden back on the worker, a scumbag move.
I'm actually quite happy with that arrangement. I work for my own company. Pay lots of tax. Claim some expenses, which brings down that tax a bit. Get paid a lot more than a "permy" doing a similar thing, and then at the end of the project I just walk away. No need for sick pay. I sort my own pension. Also, if the company needs to scale down I'll be the first to go before they have to start making people redundant. It's a good system. It works. I pay a lot of tax.
It's not good for an Uber or Deliveroo driver, which is what this article is about. They should get some protection... but I don't want to get caught in that same net (assuming I want to work in the EU)
But you won't as you are in registered as in-business / incorporated, and therefore your own business entity is the one paying the taxes. In my own industry more than several employers have been caught using this slimeball trick, you're an "independent contractor" but you must show up for work when I damn well tell you to, work where I instructed, and do exactly as I say and how. They had the book thrown at them, as well they should have - it's just a ploy to avoid paying the 12.4%+ of payroll taxes.
you're an "independent contractor" but you must show up for work when I damn well tell you to, work where I instructed, and do exactly as I say and how
If you hire a service, you typically tell them what they need to do, where and when they have to work and so on. It's rarely the case that you tell the business "make me a website", without telling what exactly you want, when and how and without overseeing the work.
When an employer hires a big consultancy, they also avoid paying "12.4%+ of payroll taxes.", but somehow that is okay if big consultancy does it.
You're either trolling or talking bollocks - or possibly both.
"When an employer hires a big consultancy, they also avoid paying "12.4%+ of payroll taxes.", but somehow that is okay if big consultancy does it." They avoid the payroll taxes because the people doing the work are on someone else's payroll. The "big consultancy" pays the payroll taxes - and corporation tax on the profit they make (BTW the difference between the charged rate and the paid rate is not all profit).
"If you hire a service, you typically tell them what they need to do". You might - which might explain your general annoyance with the world - but no one else in their right mind does. If I hire a plumber I tell them what I want as an end product - let's say a power shower in the bathroom plus a few circled options in the Screwfix catalogue. I don't tell them what they "need" to do; whether to use push-fit or soldered connections or what bore of pipe to use or what tools to use to tap into the water system, etc. etc. because I haven't got a fucking clue - that's why I'm paying a plumber to do the work. As for "overseeing" the work of someone writing me a website - unless they wrote it in Rocky Mountain Basic I wouldn't know where to start; I'd give them a spec., take their advice on tech stuff, agree a schedule (including some time for me and my customers to test it) and then let them get on with it. You might dive in every few hours to make sure they're using tabs instead of spaces, but the rest of us wouldn't.
Typically you'd specify what the web site should look like and features and maybe what technology and which resources it may use and a dead line and maybe some mile stones´with due dates.
That is covered by "exactly what you want".
Why you would expect to have control over where and when and how the contractor does the work is something i do not understand.
Funnily enough these rules don't apply to big consultancies.
Client is de facto the boss (tell what do to, how and when) and workers come in to client's office and work just like any other employees.
Yet, big consultancy doesn't have to pay PAYE on their contract, only on workers' wages and keep the profit.
"freelancer" typically operates exactly the same business model, so why they have to be treated differently and be prevented from having their business growing?
It's a game that many employers want to try to play and we need to stomp it out. They want to declare a worker "independent" to dump the responsibility of the full tax burden back on the worker, a scumbag move.
And this is what they got with changed IR35 - they can hire anyone in-scope of IR35 and don't have to worry about employment / employee taxes (taken care of by fee payer) and employment laws.
If your "freelancer" is being lorded over and told exactly what to do, when, and how
If the freelancer is engaged to develop a piece of software to meet a particular specification, to meet a delivery date and working to the engager's corporate standards and within their corporate methodology being lorded over or are they being engaged to provide a professional service?
Does it make a difference if they're employed by their own registered company; do they become employees of the engager for the duration of the cotract?
If you think it amounts to being lorded over and hence an employee of the engager are they still being lorded over by the engager if they're employed by the likes of Capita; do they become an employee of the engager for the duration of that contract?
As it happens I've worked for the same business as a body-shop employee, as a direct employee, for 6 months as a freelancer and very briefly as a freelancer engaged by a software supplier. From my point of view - and, I'm sure, the business's - these were each under distinctly different conditions.
"Funnily enough one of the other criteria is how much freedom the freelancer has in undertaking their work. If you act like a boss, you're an employer."
That was their point. Specifically, that a term like that is kind of vague. If you hire a contractor, you usually still have some requirements about what that contractor is going to do for you, including some pretty detailed descriptions of the job you intend that contractor to complete and quite often tasks they'll have to perform that place some restrictions on when they do it. For example, a contractor hired to write a system will receive a lot of information about what the system has to do, on what resources are available for the software, and a list of meetings they'll have to attend to get information which will partially set the work hours involved. Does this qualify or not? If it doesn't, then what does? It is not a test which can be applied objectively.
Sure there are tests, reasonable and easy actually. A "contractor" can decide when, how and *if* something gets done. When you hire a contractor you give them a goal, a project to perform and complete, a timeline and a budget. Beyond that, it is up to the contractor to decide how a project gets done, using what methods, what tools, what manpower, exactly daily scheduling, etc. Sure, the person employing the contractor can make requests or demands but the contractor is not obligated to follow those; a good contractor will always try to make the customer happy but, if the customer steps out of line too far, the contractor can always say "No".
Example: a mechanic you hire to fix your car. You might even supply the parts necessary. But it is up to the mechanic to decide if they want the job or not, at what rate of pay and what schedule to promise, and how to get it accomplished. And he/she is free to tell you "Scoff off" when you become far too demanding.
Employees don't have these luxuries. You can't tell your boss to "scoff off"; your boss tells you when you need to be and when, how to do these things his way, etc. A "contractor" has no obligation to abide by any of these things. When your HVAC contractor shows up 3 hours late to the appointment he made, you can't say "You're fired!" and ruin his career, his career is HIS. If you no longer want his services because he was late, well, Bye! Find someone else, he works for himself. You only hire him "temporarily".
I'm not sure that comparison works. I can easily tell my boss that I don't care about his requests, at the cost of probably losing my job. A contractor has a similar situation. A contractor that's told that they have to attend a meeting with people to determine the requirements of the project or to provide feedback on an intermediate stage will not usually get to just refuse to do that and keep the contract, but does that mean that the contractor is not really a contractor in that situation? Similarly, the mechanic can look at the task I asked for and tell me to go away, and I can look at my boss's tasks for me and quit. Those end up looking very similar: I don't do the work, I don't get paid, I probably don't get any more work from that guy. So what test do you use to determine whether a choice to leave, which basically everyone has, is that of a contractor or an employee?
"I'm not sure that comparison works. I can easily tell my boss that I don't care about his requests, at the cost of probably losing my job. A contractor has a similar situation."
Incorrect. An employee telling his boss to "scoff off" may lose his job. A contractor telling his customer to "scoff off" loses the contract but the 'job' is, and always remains, HIS.
See how easy this is? I believe you are just being contrarian. A contractor works for HIMSELF, and has customers. He is free to deal with, or not deal with, customers as he sees fit. At any time, all the time, every day.
An employee must do what his employer requires, many times regardless of his personal opinion of the options. Yes, he can quit, but at risks. Contractors have those risks, too, but it is up to the contractor on how those risks are dealt with - no one else. The customer is just that, only a customer. He holds no sway over the contractor beyond the contract that he is currently under; he can ask the contractor to show up at 6AM tomorrow but if the contractor can't do it, that's it. The customer can either accept or not, even cancel the contract, but it is an agreement of EQUALS. A boss can ORDER an employee to show up at 6AM and if he doesn't do it, he can be fired - there's no equality.
That's the measurement: how much equality is in the deal. No equality? Then you just might be an employee. Equality in choices and power? Then you are probably a contractor.
I'm certainly not trying to be a contrarian. I think I'm failing to understand the distinctions that are so clear to you. For example, losing your contract and losing your job don't feel all that different to me. Using myself as an example, in either case, I am still a programmer, I still have the ability to go find someone else who wants to pay to get some code written, but I don't have the relationship that was bringing in income anymore. Therefore, if failing to show up early in the morning can get me fired or have my contract canceled, it feels like a similar level of power to me. The mechanics of how I do the job are different if I'm a contractor or an employee, but I will have similar requirements if I want to keep earning money from that company. If I'm a contractor and the company cancels it, what I am left with that an employee wouldn't have is the structures I set up to do the contract, for example the corporate entity through which I work, but that's not a lot since I, as an employee, could also just set one up if I decide to start being a contractor.
There is clearly a difference between contractors and employees and should be one. I'm not opposed to trying to classify gig workers as employees, although my opinion on it varies with what specifically they're doing. I just don't think the test of how much freedom they have works very well because it seems difficult to quantify that. If I'm working as a contractor for a massive corporation, someone trying to apply the rule probably won't think that I have an equal level of power with that company, but size doesn't necessarily equal the amount of power they have. Many of the other tests that are used are things that a computer could do given some defined inputs, or at least a human could do without having to require too much common sense, while the level-of-control test would appear to require a lot of subjective determinations.
For example, who has more freedom: a person who is tasked with going to a specific location at a specific time and decides in advance whether they'll take it or leave it, or one who gets individual jobs and accepts or rejects them at the time? Using those descriptions, I would say the former is the more restricted, but those are descriptions of a cabling contractor who has to install cable in an office when it's not in use and a rideshare driver who gets to choose the rides they do, and with those clarifications, the driver seems to be the more restricted. You could use a different test, such as whether there is an intermediary involved, but that still wouldn't change all of the ways the worker does control their situation, arguments that those businesses are sure to bring up when this test becomes part of a court case. That is why I suggest we find a clearer way to make that determination.
You are looking at this from a frame imposed by the Treasury.
When you run your own contracting business, you do nothing different than a big consultancy, except the projects you do are smaller in size.
When big consultancy sends their employee to do the contract, nobody is debating about that worker autonomy, freedom or whether they work as if they were an employee of the client and big consultancy can make profit from that worker. Like taking £1000 per day from the client and paying £60k salary to the worker to work at the client.
The client still avoids paying employer taxes (they don't pay Employer's NI on that £1000 per day).
It's all setup to prevent said worker from quitting big consultancy and setting up their own business and undercutting the big consultancy.
After all, the client would love to pay £600 per day for the same work. The worker's small business after all doesn't have the same overheads nor fancy office to pay for.
I am really amazed how IT workers are okay with that.
Maybe it's just an IT thing, but I don't see any of this. I run a two-man Ltd consultancy in the UK and we have a few other freelancers we can bring in as needed. We've been going since the 00s. We're pretty niche - not IT specialists but we've done some work on the fringes of IT - e.g. ERP/MRP related - in which case we sometimes partner with an IT consultancy - and I mean consultancy, not a body shop. We find clients (usually they find us), we negotiate the contract, SOW, WBS, schedule, payments, etc. and usually we provide all this documentation, not the client. We agree payments (day rate or fixed price depending on the work/client), do the work, get paid, get a quote for the website and move on. We've only ever had one mention of IR35; a couple of years ago the CFO queried the status of the contract under IR35 and the Commercial Director (who'd negotiated it) told her it wasn't a problem. We have worked alongside "big consultancies" for a couple of clients - by which I mean the likes of PWC and EY - and they, unsurprisingly, work on the same basis as us. We manage our clients, not the other way round, so there's never any debate about autonomy, etc.
Based on my experiences I'm not really sure what your beef is with "big consultancies".
If you are an owner providing the service you are very much bound by IR35 and your clients HAVE TO determine your status and do all other paperwork.
If HMRC comes looking and they find your contracts should have been in scope of the rules, then your clients will be on the hook for all the missing tax and penalties.
If they don't mention IR35 it only means they are oblivious to the rules and HMRC hasn't come sniffing yet.
"For example, losing your contract and losing your job don't feel all that different to me."
As an employee, at least in the UK, you would have some employment rights that would have to be met. As an employee you'd be harder and probably more expensive to fire than a freelancer*. That's why it can be preferable to hire contractors for at least part of a project that could be cancelled.
Being more expensive to fire would also make you more expensive to hire as there'd be more HR hoops to jump through. This also fits with project work - the manager who needs to staff a project right now can do so by engaging freelancers who are currently available. Providing immediate availability is a cost to the freelancer and is a reason that freelance rates are higher than salaries even taking into account that the freelancer rate has to cover costs which, with an employee would be additional to salary.
* I'm assuming without just cause. Even with just cause if you wanted to make a fight of it at a tribunal you could make it fairly expensive. This is all assuming we're not in a hire at will jurisdiction.
"Beyond that, it is up to the contractor to decide how a project gets done, using what methods, what tools, what manpower, exactly daily scheduling, etc. Sure, the person employing the contractor can make requests or demands but the contractor is not obligated to follow those"
The client will have standards to work to, possibly even regulatory. On delivery the product is going to have to fit into the wider environment of the client and to do so may have to have been completed using the client's preferred methodology. None of this should determine whether the contractor is an employee or not - it's just a matter of meeting professional standards.
The correct test to meet is whether the contractor is acting as a business. As long as you look at the conditions and ask if they fit with being an employee but not also asking if they fit with being a business then you will get a biased answer. What has happened is that there is a lot of case law, at least in the UK, about recognising an employee which has arisen out of people seeking to be treated as employees. There are, of course, criteria for being a business - registered company and registration for VAT but they don't really count because legislation has been drawn up which allows that to be disregarded. What's needed is case (or statute) law which looks at how the putative business is conducted - is it really being operated as a business - which take into account a right to be in business on one's own account. If such tests existed then it would be possible to judge on an unbiased balance of probabilities as to whether a contract was of service or for services. It would, I think, be very likely that the grey areas which allow for many gig economy jobs to be non-employment would lergely or entirely disappear.
There are, of course, criteria for being a business - registered company and registration for VAT but they don't really count because legislation has been drawn up which allows that to be disregarded.
If your client deems the contract in-scope of IR35, you still have to charge VAT if your business is VAT registered.
The payment chain goes somewhat like this:
Client pays rates to the Fee Payer + VAT (the Fee Payer acts as a deemed employer for tax purposes)
Fee Payer deducts employer and employee taxes and then sends remainder to your LTD plus VAT
You can pay yourself deemed salary or tax free dividend from that revenue (it has already been taxed, so no more tax due) and then file the received VAT in the company VAT return.
So you are still doing full accounting etc. and you can have in-scope and out of scope contracts running concurrently.
This shows how divorced from reality these rules are.
Bollocks.
My handyman example, you think I should actually employ my helper? Even if I know I'll only be needing them for 18 months? And they already have their own limited company for doing this kind of work for other people? I know 18 months is a long time for a project, but that person is very much not my employee. I just want them for a specific piece of work. Of course I have to direct them (dig that sewage trench THERE, not just where you feel like) I have to supervise them (when you've finished that, go and collect this delivery) and control them to a certain extent (sorry, you can't work next week we need to stop until the surveyor has come out). Although as long as they work within the spec, I'll be pretty much happy.
Actually the site you link to seems to make a distinction between "working for yourself" (which could possibly be through a limited company) and "self-employed" which is a stricter legal/official designation.
In my post I am using "self-employed" as the legal term not the colloquial term
>you think I should actually employ my helper?<
That depends more on other things than you needing him for only 18 months. Time limited contracts doesn't mean it is independent work.
In my opinion you should employ him if you pay him by the hour and give him additional tasks like picking up a delivery after he is finished with his current task.
My handyman example, you think I should actually employ my helper?
If you want someone (not a company) to work for you for 18 months, full-time (i.e. don't have time to work for other "clients"), determine the working-hours and generally boss them about then *you are employing somebody*. Linguistically as well as legally in some jurisdictions. The fact the contract is limited to 18 months is neither here nor there.
Which means taking on the responsibilities, moral and financial, of being an employer. Because in your example, that's what you are.
Usually when truly self-employed people such as handymen, plumbers, electricians, etc. are taken on, the job is a lot shorter than 18 months, they're undertaking other jobs parallel, and they turn up when they say (if you're lucky).
People refusing to behave as adults and take on their responsibilities is why delivery drivers in the UK are forced to resort to pissing in empty bottles whilst working.
the job is a lot shorter than 18 months, they're undertaking other jobs parallel, and they turn up when they say (if you're lucky).
Can you explain how a plumber can be in a few places at the same time?
Usually they work one client at a time, under direction, at specified time and place.
I'll answer in good faith and assume you're simply cognitively impaired as opposed to being deliberately obtuse. (Though looking at your other comments it could well be both.)
Plumber comes around for an hour. They've already been to other clients *that day* and may well go to *others* afterwards.
Maybe they need a part and come back next week for 2 hours. In the between time, they've also been working for *other clients.*
They haven't been working solely for me 8 hours/day for a week. The plumber tells me "'I'll come back next Tuesday at 5" not the other way around. I'll tell the plumber what I think the problem is, but unless presented by them with options, I don't tell them how to fix it. I offer a tee or coffee and keep out the way.
Oh starting with ad hominem.
Plumber comes around for an hour. They've already been to other clients *that day* and may well go to *others* afterwards.
That's not parallel, is it?
Maybe they need a part and come back next week for 2 hours. In the between time, they've also been working for *other clients.*
Do you know that employee can have multiple employers? Do shift at one and another shift at another employer then maybe come back to the first one to finish something?
hey haven't been working solely for me 8 hours/day for a week.
That's irrelevant.
The plumber tells me "'I'll come back next Tuesday at 5" not the other way around.
Maybe you need to be more assertive. You can certainly tell a plumber when they can come back.
I'll tell the plumber what I think the problem is, but unless presented by them with options, I don't tell them how to fix it.
Often an employer doesn't know how to do something as well, so they give employee a discretion how to do something. Also irrelevant.
"I'll answer in good faith"
I accept your good faith and wish others had it. The whole history of IT freelancing in the UK is that of the Treasury, Chancellors and HMRC not having good faith.
The plumber may come round for an hour or so (BTW, one reason I originally mentioned plumber was that my boiler was being serviced as I wrote) because a plumber's job takes an hour or so. An IT developer might come round for 3 months because an IT developer's job might take 3 months or so. The fact that a plumber will undertake many one hour jobs in 3 months shouldn't put him in a different category from an IT developer undertaking one job in that period. Bad faith is used to penalise the one and not the other for taking as long as the job needs to perform it.
"> So, IT Contractors should not exist in this scenario?
Of course they do. They're employees of the outsourcing company."
Maybe things are different in Germany but in the UK IR35 was devised to be able to ignore the outsourcing company if the worker owned more than 20% of it.
Dear Doc Syntax, this is correct (AFAIK not having having to have dealt with IR35).
I will mention that the original article on which we're commenting is about planned EU legislation, the UK is no longer a member of the EU, and I gave the example of Germany's existing law because as well as being familiar with the legislation, it is an EU member state.
My subjective prediction about the low probability of a similar UK law is due to the UK government not having a problem with low paid gig workers being totally fucked over, and judging by some of the other comments here neither does part of UK society. Says something about the state of a country if you ask me.
As I mentioned elsewhere, delivery drivers for example in the UK have to resort to pissing in empty bottles whilst working. This phenomenon doesn't occur in Germany funnily enough, due in part to stronger employment legislation.
"So, IT Contractors should not exist in this scenario?"
The exact legal details are different in each country, but the basics are similair:
1) you as a contractor have your own Ltd company, through which you pay yourself a salary. Your company has to pay social security contributions for you as an employee, and you as an employee have to pay your part of social security
2) you as a contractor work through an umbrella company. Legally you are an employee of the umbrella company, through whose payroll you pay social security contributions
3) you are, legally speaking, self-employed, meaning you don't have payroll and your contract income goes straight to your personal finances*. You still have to pay some amount of social security contributions to be eligible for a pension, but whoever is paying you has no such obligation.
If you aren't actually a contractor but are really employed by a company, the social security situation is similair to 1) or 2) above, you and your employer both contribute to social security**
Gig economy companies like Uber want their workers to be treated as 3) above because in that scenario they do not need to pay any social security, so they can offer cheaper total prices and undercut companies who actually employ the people working for them. Any such legislation should not impact IT contractors at all unless they are using this model.
*for various tax and liability reasons not the wisest way to work as an IT contractor
**Strictly speaking this is a giant lie concocted by government and employers. The money is still coming from the employer as what they are willing to pay. So if I get paid 90k, and me and my employer each pay 9k (10%) in social security, my employer is willing to pay 99k to employ me. So the reality is no different to me being paid 99k and having to pay the government 18k in social security. But by shuffling the numbers around, it gives the illusion both that the government is taking less of my pay for social security AND that the employer is contributing something 'extra', which they really aren't
1) you as a contractor have your own Ltd company, through which you pay yourself a salary. Your company has to pay social security contributions for you as an employee, and you as an employee have to pay your part of social security
There is also another point where you have your own Ltd company, but you are being paid through a fee payer that applies any PAYE taxes before they reach your company and then you can pay it yourself as a tax free dividend or deemed salary. This is when the client deems your business in-scope of IR35 and you refuse to use an umbrella.
" blanket rules like this just catch people like me who are quite happy running a business and working for someone for 3 / 6 / 12 months at a time."
Exactly.
Dear Gummints: I do not WANT your "help" I do not NEED your "help" and as Ronald Reagan said, the 9 most terrifying words in the English language are "I'm from the government and I'm here to help."
Fortunately I also have a corporation which helps me sort things out better (expenses, billing, taxes, etc.).
One of the main criteria is if over 80% the income is from one "client" then you're actually employed.
This is only to protect big consultancies that operate the same business model. As in an employee of big consultancy will work for extended period of time for consultancy's client, but consultancy will be able to make profit from their worker's work. However, if worker decides to cut the middleman and work with the client directly, they are classed as "fake self-employed" suddenly and can't make profit.
This is quite corrupt law.
You keep missing the personal aspects of the implications of the laws.
Your constantly-used example, "Big consultancies", does NOT work because when a business hires a consultancy they are doing a business-to-business transaction. One business, which is registered and pay government taxes, hires another business, itself registered and pays government taxes, they do business together. The trade of funds is not a payroll expense on either business' ledger, it is entered as a line item cost (capital expenditure, maintenance, etc) and as an income sale on the other. The hired consultancy is therefore responsibly for paying the proper amount of taxes to the government for the hired workers it sends to the client in order to get the job accomplished, which of course is entered in the accounting as part of the payroll expense items.
All the references in regards to how the law is to be interpreted is on a inter-personal, individual level; a business-to-business transaction can not be payroll by definition, and therefore payroll tax questions can never apply.
In your example here, can the worker leave the consultancy and go to work for the client directly? Absolutely! But then either one of THREE options apply (here in the U.S., at least):
a) the worker creates his / her own business, an LLC or a sole proprietorship, and then registered him / her-self as an employee of said self-owned business. They can do that either as an actual "worker", giving themselves a W-2, or via disbursements of the profits via the LLC. Either way, the work for the client then becomes a business-to-business transaction and the worker's business is responsible for paying payroll taxes. The worker is actually now either an "employee" or a "member" of his own business, and said business pays taxes.
b) the worker is hired directly by the client's business. As an employee, the worker receives a W-2 and the 'client', now "employer', must pay payroll taxes.
c) the worker works for the client directly as a non-incorporated ('self employed') "independent contractor". The worker receives a 1099 at the end of the year to report a total of how much funds they received through the year for their services, and the worker must not only report this as personal income but, in may jurisdictions, pay estimated quarterly income taxes on how much they expect to make by the end of the year in order to satisfy the government's tax requirements.
----------------------------------------
You keep trying to cross "business-to-business" transactions into the question in order to confuse the issue and the discussion. Hiring a consultancy is hiring another business, and *that* business will follow correct laws and pay its taxes. Hiring an individual is where these questions come up, because it has been used to defraud the government of taxes, a government that used said taxes to provide services to said individual.
I am talking about business-to-business relationship all the time.
In the UK, the IR35 rules single out small business where owner of the business performs the service.
For all intents and purposes they don't do anything different than a big consultancy, yet they - in most cases - are forced to pay employment taxes on the company revenue and thus their business cannot make a profit.
This has been created specifically to prevent employees of the big consultancy from leaving and starting a competition.
I don't read that at all in the gov.uk IR35 website. The UK rules regarding employment seem to be pretty equivalent to the U.S. rules: if the worker quits the consultancy and goes to work for the client him/her-self, he/she must either construct or be under a working paradigm where payroll taxes are paid.
It's described here:
https://www.gov.uk/guidance/understanding-off-payroll-working-ir35
Basically it applies to a business where the owner performs the services, thus essentially preventing the company from making profit (because payroll tax is applied to the company turnover).
If the issue was about taxation, big consultancies should also be caught by the legislation, because their client avoids paying employer side of tax.
The IR35 Rules are simply the equivalent of our 1099 independent contractor rules. As I said, no matter how the labor is supplied someone needs to pay employment taxes on it, be that the individual worker ("independent contractor"), his/her personally-own business (where, therefore, the owner is either an "employee" or "owner"), or a straight employers.
You still have it *wrong* because you *still* insist, by your own words, in trying to twist the words to suit you:
"big consultancies should also be caught by the legislation, because their client avoids paying employer side of tax."
And here is your CONSTANT mistake: a big consultancy is NOT, and never WILL BE, an employer in your theoretical construct. I *told* you that, in your example, it is a business-to-business transaction of a business solution, not employment. The consultancy promises a service and, to supply that service, the *consultancy* uses labor to fulfill the requirements. That makes the *consultancy* responsible for taxes, as THEY employ the labor, not the client, who hired a company to provide a technical solution.
Why is this concept so hard for you to grasp? And no, this "preventing the company from making profit (because payroll tax is applied to the company turnover)" is TOTALLY dependent upon the choice of the owner on how he/she incorporated and constructed the company. If you have a "pass-through" corporation then then pay INDIVIDUAL taxes and not corporate taxes, thereby saving that portion of the tax burden
https://taxfoundation.org/blog/pass-through-businesses/
Conversely, one can incorporate in a standard C-type corporate and hire yourself as an employee, thereby allowing the business (rather than personal) to hold on to any extra profits and use said profits to grow the company.
https://www.investopedia.com/terms/c/c-corporation.asp
It is up to the OWNER, when they establish the business, to decide how they wish to handle their future income and tax burdens; you are making a single generalization in the belief that "employment taxes" apply everywhere, to everything, under all transaction types. You are incorrect.
"if over 80% the income is from one "client" then you're actually employed. [...] No chance this side of hell freezing over that the UK will introduce similar legislation"
And I hope Hell freezes over first, as a blanket provision of this kind would entirely destroy the effectiveness of the independent one-person expert consultancy. IR35 has already seriously damaged it by going in this direction, but that proposal would be its final death blow.
The problem with "80% = employment" is the harmful side effects. For example, as a strategic consultant I've commonly served one client at a time for extended periods, often entirely reshaping corporate processes, but being independent of the client has always been crucial to success. An expert consultant frequently has to bring bad news or specify significant changes to processes or corporate culture, but an employee is bound by contract to abide by the very rules or mores that need to be changed. So the exec won't listen to an employee but is more likely to listen to someone perceived as an independent.
Most often, these "work status" problems are considered from a limited perspective without reference to unforeseen consequences, but they must be taken into account. A critical factor is the nature of the service provided, particularly whether it's a commonplace operational function (e.g. delivery, cleaning, clerical) or relies on significant individual expertise and experience. Where IR35 seriously got things wrong from the contractor's perspective was its insistence on "substitution" as a key to remaining outside the regime. An experienced expert in their field will almost automatically find it difficult or even impossible to arrange for a "substitute" as their expertise is essentially personal.
I'm in the same boat as you - specialist consultant who can tell the boss the truth without fear of the sack,etc, etc. The only difference is that I'm honest enough to admit that the real "harmful side effects" of such legislation is that my clients would expect me to take a rate cut if they were paying the overheads associated with treating me as an employee.
Where IR35 seriously got things wrong from the contractor's perspective was its insistence on "substitution" as a key to remaining outside the regime.
Funny that, even if you can provide a substitute, because it is in your contract, it won't count if the client could have hired your substitute directly. This means for this to work the substitute would have to be hired by your company full time and not as a subcontractor.
If you paid your colleague contractor to substitute you, HMRC can say that the client could have well done the same and from that they can say the whole arrangement is designed to avoid paying tax.
(which is obviously wrong on so many levels, but this is the state of this debacle)
So, how does this work for contracting platforms? Like, if you offer your services contracting on Fiverr, or Upwork? The contract is with each end customer, and price/milestones/quality/deliverables/how you do it, etc nego'd directly with them. Its up to you which work you take on, and where you do it. But the platform sits in the middle, taking a cut from you, and holding funds in escrow. Does Germany consider you employed by platform? Because that's who is on the pay cheque.
enormous financial consequence – both to workers and to the platforms that hire them.
Not to mention their customers, who will be the ones who end up paying for it in increased prices.
My bet is that the larger legitimate companies will pay up and pass on the costs, and there'll be an increase in the number of smaller companies which will keep prices low by paying under the table. That won't help workers or customers.
"Not to mention their customers, who will be the ones who end up paying for it in increased prices."
Maybe - but it wasn't very long ago when nobody had their fish and chips delivered from the chippy that's only 100 yards down the road. When people have to pay the full cost of personal delivery they'll get off their arses and walk to the shops and we'll all be better off for it.
When we lived in the Stately Manor, my wife got in the habit of having takeaway delivered. I didn't want to fight about it.
Here at Mountain Fastnesses 1.0 and 2.0, there is no delivery option, and I'm glad. I'm an introvert by nature, but if I want people to perform a service for me (even if I'm paying for it), I like to look them in the eye and acknowledge that they're people too, living their own lives. And I like to leave the house and be reminded that there's more to the world.
"but it wasn't very long ago when nobody had their fish and chips delivered from the chippy that's only 100 yards down the road. When people have to pay the full cost of personal delivery they'll get off their arses and walk to the shops and we'll all be better off for it."
Why is this a good thing? If people are for job creation then paying someone to do something for you tends to be how it is done. If someone has something better to do with their time and willing to part with the money then someone else gets some cash for doing that job.
@ecofeco
"Jobs that don't pay the bills are not jobs, they are exploitation."
Yet people get paid what the job is worth (their production). So those people who cannot produce enough to pay all the bills (note that is not the only reason for people to work) are not worth anything?
@Michael Wojcik
"Delivered monthly by the Payment Fairy on her unicorn, no doubt. What a pretty world you live in."
I am not sure how to respond to that. Do you not work? Do you not get paid? Or do you do things not worth paying so nobody pays you? Are you still in school and not learned about the outside yet? And payments aint always monthly, it depends on the type of work you do for who and the agreement you make.
Go on which bit confuses you?
Read these out a couple of times from the article
28 million platform workers, including taxi drivers, domestic workers and food delivery drivers,
...
services like Airbnb, Amazon Mechanical Turk, Lyft, and Uber, which classified workers as independent contractors and thus avoided paying for worker benefits and employment taxes.
On the last point there are clear advantages for companies to operate this way and on the face of it, it seems very much in their favour. But then go to the first point. If there were only a handful of people doing this you might question their sanity. 28 million is a reasonable number even in a geographical context such as Europe. Some of these people are no doubt already in some form of employment but choose to do things on the side for extra money, for obvious reasons.
All of those roles listed - and many others - are in high demand due to the number of people who use such services.
There is demand for all aspects of this (including from the companies that want such workers) which is why I don't think it'll just go away very easily. Sick pay, bare minimum pension contributions etc that you get from being "properly" employed aren't all that good in any event. In which case a better solution would be that being employed is so much better that this becomes unthinkable. But that will never happen. There is always demand for this type of arrangement from all sides: companies, workers and consumers.
Those roles are only in such high demand because the services they provide are so cheap because the platforms are not paying what an employer should be paying. If the platforms paid a a living wage with benefits, sick pay, holiday, etc. and covered all the real costs (vehicle, insurance, etc.) so that the delivery charge is twice as much as the meal then the demand would dry up.
The demand side from the employees' point of view is pretty skewed; if you've no choice of job then delivering pizza to stay on the breadline might seem OK - just like If you're starving to death, pizza from the bin looks good.
@Headley_Grange
"The demand side from the employees' point of view is pretty skewed; if you've no choice of job then delivering pizza to stay on the breadline might seem OK - just like If you're starving to death, pizza from the bin looks good."
Based on that analogy how would the person be better off if they were starving to death and there was no pizza? That would surely result in them starving to death instead? Just as banning people from jobs because of an insistence of banning their jobs?
You also mentioned a living wage, which isnt actually a real thing.
@AC
"Is that an example of fickle clown economics?"
I know your playing the dumb troll act but some people really do have this serious misunderstanding. You do not improve someones situation by taking away their improvement to their situation. Are they better off with something or nothing? Forget wishful unicorn farts and fantasy but that there is the question.
A "yes" would have been fine.
In the realm of Fickle Clown Economics, the peculiar twist lies in the clowns themselves being the primary suppliers of discarded pizzas. These enigmatic jesters, with colorful costumes and oversized shoes, roam the streets distributing pizzas with a mischievous flair. As people partake in the unconventional practice of obtaining sustenance from garbage bins filled with clown-supplied pizzas, economic dynamics take on an unpredictable rhythm.
The theory contends that the clowns' capricious distribution of pizzas creates a unique demand-and-supply dance. The eccentricity of clown antics introduces an element of surprise into the market, where the value of a pizza may fluctuate based on the theatrics involved in obtaining it. This surreal economic landscape suggests that the more entertaining the clown's performance during the pizza retrieval, the higher the perceived value of the pizza in the Fickle Clown Economics model.
@AC
"Example of Fallacy of Relative Privation."
Care to explain? This was the analogy from Headley_Grange. The analogy basically being a starving person with pizza (a job) or nothing. To me leaving them with nothing makes their situation worse. It would be interesting to hear how making them worse off is better?
And even at that a lot of drivers are quitting. Uber relies on people being too foolish to realize they won't make back what they pay in fuel, vehicle depreciation, and insurance costs; once people have done it for a while and realize they're losing money, they quit. Uber is starting to run out of fools.
Are they? Not saying they're not, but the sources I've found about this all come from 2021 and 2022. I'm curious to know if Uber and the other fake-taxi companies are still having trouble recruiting and retaining drivers.
(Personally, I have not and will not use Uber, as I dislike them as a company and dislike their business.)
You might want to check on that.
Uber have been pissing money away for years but they are now profitable.
https://investor.uber.com/news-events/news/press-release-details/2023/Uber-Announces-Results-for-Second-Quarter-2023/default.aspx
Sadly, this profitability appears to have coincided with their service getting much worse - in London at least.
"gig" work is what I have mostly done for the last 30 years, usually through my corporation. In engineering and IT (as we all know) the demand is often short term, and mucking about with "that other stuff" is most easily done by just paying a higher rate and letting the gig worker manage it himself. I actually prefer that.
"Between gigs" is more than enough vacation for me and I can better manage my own "HR crap" thank you very much.
I would imagine the major problem here is how to avoid classifying the genuinely self employed as workers; and there is no question that Deliveroo etc. will argue back that it's drivers choosing to be self employed fall into the former category.
I would suggest the more obvious advice is that if you aren't satisfied with the T&C's you're on, get a different job.
- by radically simplifying the tax system and making it fair.
How to simplify taxes
The first step is to abolish all business-related, corporate and personal income taxes, and replacing them with VAT chargeable on each service, including employment relationships.
A person employed, in fact, provides a service, therefore the person should charge/pay VAT on the service.
Business-to-business services to be taxed exactly the same: only VAT. Export service/goods too: pay VAT *before* the good exits the country. Higher value goods with longer business chains will pay many more VATs (at every step). Simpler services will become cheaper, and vice versa, which also well reflects environmental impact and economic effect of complex products. Simpler life means paying less taxes. Consumption of complex products implies higher taxes overall.
Since everyone pays VAT, there will be no more VAT exceptions or returns, slashing related fraud.
Since VAT is the ONLY tax, the whole tax system becomes simple, and related overhead to run business disappears. Modern IT makes reporting VAT simple and traceable.
Making taxes fair
Progressive tax is nonsense for a non-trivial reason: accumulated tax paid life-time.
Taxes must be inversely proportional to tax contributions life-time of the person or a company. That is, the larger cumulative tax you have paid life-time, the less tax you should pay. (VAT in the new approach.)
Why this is fair: accumulated paid taxes mean accumulated capital by the state.
Even the higher medical costs for older people are covered by their cumulative contribution over life time. And this is why people, who have contributed less, should pay higher tax (= VAT in the model). The same for new companies, because of risks involved.
Such taxation will encourage hard workers to work more and discourage slackers. This will also encourage better self-education/qualifications, to be able to earn more. Which also means larger contributions to the treasury and expansion of the economy by increasing the volume of goods and services produced.
Unfortunately now the income tax system discourages hard workers. Assuming the money is an information system, where more expensive service signals higher added value, why tax them more for proving more services?
"Unfortunately now the income tax system discourages hard workers"
because "equal outcome", not equal opportunity and fairness, has been the goal all along (it's the next worst thing to communism).
Simpler proposal is a pure flat tax, equal rate for all income, for individuals and foreign entities. For individuals you have a personal deduction of X per person filing, then total up all income, total - X * people is taxed at a flat rate. Business income/expenses would be evaluated separately. Most people would fill out taxes on a half sheet of paper. corporate tax would be effectively paid by dividend recipients and shareholders who receive draft payments (which is why you also tax foreign entities that receive such payments).
The problem with VAT is it is too complex and you will be back to various schemes of not paying it. Make it simple and fair (and lower for most people) and there are fewer cheaters, and HIGHER revenue (see Laffer curve). Wealthy people may even end up paying MORE, but would avoid frequent costly audits in the process.
I agree with a flat rate of tax, however, I am neither stinking poor or stinking rich therefore I have little to lose in that situation.
The problem with VAT is if you get rid of it a large number of public sector employees will be out of a job. That's one of the main reasons they don't scrap it...what to do with all the jobsworths? Scrapping VAT would create around 30,000-50,000 benefits claimants. Ultimately most of these people would end up on their arse anyway because of AI, so we might as well deal with that problem now than later.
Back when I used to have to do VAT returns (when it was paper based) was the fucking insane final box. "Please enter the amount outstanding / owed to you"...one single box for either the balance you had to pay, or the amount they owed you...this led to so many cock ups it's absurd...why it had to be one box, I'll never know...you'd be sweating for about a month wondering whether the person processing that form read it correctly...then you'd get the letter from HMRC land on your doorstep and everything would slow down..."Thank fucking Christ they got it the right way around this time!"...if they got it the wrong way around, you'd have to pay up, then make them aware of the mistake and wait 6 months to get your money back...on the flip side, if you were a day late on paying, they'd hound you into an early grave...completely batshit crazy.
Being VAT registered is potentially the kiss of death for your business, unless you run a massively profitable business...your entire business, once a year, ends up in the hands of a faceless, civil servant jobsworth who hopefully has all his marbles when he gets to your form...a simple mistake can completely ruin your cashflow which leads to a cascade of problems...you're now out of pocket because you had to overpay on your VAT bill, so you can't pay the bank loans, so they get pissed off and fine you for late payment, which is more dead money, then you haven't got enough for suppliers, bills, rates etc...then they get pissed off and cancel your accounts or fine you...it just sucks...this country seems to have an adversarial attitude towards small business...everything is against you.
On the flipside, France, seems to absolutely love small businesses, they throw money at startups out there and quite a lot of it you never have to pay back, or you pay it back when you're ready. Granted, you get less money out there, but you also get considerably less stress. We have none of that over here...people are climbing up your arse and fist fucking you from day one. They're knocking on the door and sending you letters from lawyers after 3 months...this is a country where nobody wants you to succeed, they just want you to pay up.
Current tax system resembles legacy spaghetti code. How cannot it be, in the context of the negative comments here about government inefficiency.
While computer languages and tools have evolved, tax system does not seem so. This is absurd. Especially that modern IT enables solving most of the problems. Ideally a NEW tax code should be an algorithm. If not algorithmically describable, any change should not be implemented at all. Literally, we need a GitHub page for the tax code.
Flat tax seems a good idea. It is not clear though why businesses, self-employed, or employees should be treated differently, and why there is a jungle of different taxes/social/corporate fees etc, if the redistribution side is almost always the government anyway.
Let's better observe how all those gig workers lose their jobs in the deflationary market, where ANY job is hard to find. Criminal services alternative is wide open for all those with IQ below average.
It is pretty damn hard to be self-employed in Europe, where you are charged with social security payments before you make a dime of revenue.
I am not so sure the gig workers will thank you. Many small services and tiny businesses simply will not exist anymore.
It is pretty damn hard to be self-employed in Europe, where you are charged with social security payments before you make a dime of revenue.
It depends on the country, but generally social security has to be paid to receive healthcare and a pension. I guess neither of those things matter in the US, where people are free to die in a ditch.
Yay, well done, you have described the most regressive tax system possible. The poor will pay most of their income in tax while the rich will pay the tiniest proportion possible. All you will do is drive millions into poverty and make the rich even richer. The exact opposite of what a fair and progressive tax system is supposed to do.
Quite. That is by far the biggest issue with flat rate indirect taxation - the least well off always end up paying a disproportionate amount of their earnings in tax because they have to spend a much greater proportion of their weekly earnings on the necessities such as food, clothing, housing, energy (sometimes having to spend all of it), and therefore are being taxed on most of that, whereas as you move further and further up the payscale, the amount spent on the basic necessities only increases marginally (as higher pay means you can buy better quality), but as you get further and further up there is an increasing surplus which the earner can then choose to spend (and pay tax on) or can save and invest, where he can usually (in the UK at any rate) do so in a tax free type of investment, so wouldn't pay any tax at all on that part of his income under a purely indirect tax system.
I would argue that abolishing all forms of indirect taxation and having it all gathered from a graduated scale of direct income tax would actually be rather fairer, but even that would not be without its problems, and still unlikely to be completely fair to all.
VAT is a consumption tax, as is is duty on booze, fuel etc. Most countries use both. And if you’re wealthy enough you can avoid that too - see eg buying property through an offshore company then selling the company share rather than the property to avoid stamp duty.
The government doesn't give a crap about people & businesses who voluntarily choose to do business in a "Gig" financial arrangement.
Until the point at which it reduces "Government Revenues" (ie: taxes). Then they get involved and pretend to care. The minions shall not attempt to come between the government & their money.
I don't think anyone promoting these regulations could give a tinker's about a "worker" that is taking home compensation well above the odds. The individual that this type of regulation is attempting to protect are pretty much on subsistance or lower payments which is one very simple criterion to determine to whom these measures should apply. If you were taking home less than say 130% of the average weekly wage (after deductions) ALL of those paying for your services must treat you as an employee and subject to applicable employment legislation. I would guess Uber : RIP (no tears from me.)
Modern history including that of English industrial revolution and its consequences was part my school's curriculum (long enough ago to be modern history itself) and to me that this really appears to be a case of the lessons of history not being learnt and doomed to be repeated.
Historical revisionism is so rife that history is rewritten with the mistakes of the present so that errors of the past have largely been erased except of course where they amplify the those of the present.
Good points.
If you want to run a pub then the licenced victuallers has a website with a number of models (wet-led, some food, full gastro, etc.) with indicative costings to show how much money you can expect to make and what your outgoings are likely to be. The model will tell you, for example, if you want to run a wet-led (i.e. no meals) tied pub as a live-in manager with you and the missus working plus x staff and want to pay yourself £30k a year then you'll need to turnover xx punters per week, etc.
The government could do this for the gig economy - model costings of vehicle purchase, insurance, holiday, sick, pension, accounting, etc. that would allow you to calculate how many miles per day and how many hours per day you'd have to work based on platform pay rates to give you an effective salary after you'd covered your overheads. This would shake things up. In my world I'd arm HMRC with legislation that taxed platforms into oblivion if they paid rates lower than the models recommended for a decent wage.
What if the alternative to providing cheap services is no jobs at all?
It would be better to allow independent gig workers, and provide them with free social services, or slash income tax for such workers instead. At least this would not cause market distortions by forcing businesses to pay above the market value.
Yes, the government should figure out where to take the money from. But without distorting the mechanics of the free market.
Just a method to increase union memberships. Would be tough to unionize independent gig workers, like herding cats, not so tough to do that to those so called employees. How about asking the gig workers themselves or do the so called elites think so lowly of the gig workers ability to think and act for themselves.
Mutual independence is an important reason for why gig workers exist: the employer from the employee and vice versa. Smaller businesses simply would not employ low-qualified workers at all, because of too many risks involved. While employees are not necessarily happy to commit to one (crappy) job full time, looking for other opportunities.
Yourself, would you employ a person with IQ below average, with a criminal record, or no education? What is the proportion of population with such "credentials". I believe it is quite big.
Instead of artificially forcing gig workers into otherwise non-existent jobs and unemployment, one-person business should be made simple and even should not require social security contributions. Because the only alternative probably is government-supported jobs, which do not serve any purpose or market need.
Also one-person gigs provide small services, which otherwise would not exist. It is better to provide free social security to such persons, rather than leave them without jobs, pay them unemployment benefits, and even force them into criminal activities. Also being unemployed has social stigma and causes personal degradation.
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