Some topics just seem to be everywhere I look, just as I’m thinking about them. The week after I have a conversation with Tammy Erikson about how legislation is going to be needed to re-shape the employment relationship, People Management reports “some politicians have talked about the need for a fourth categorisation between ‘worker’ and ‘self-employed’”, and the BBC reports that Matthew Taylor, CEO at RSA and lead on a government review of employment practices, says “a complicated tax system and lack of clarity on the law meant that employers and employees often clashed”.
Third-sector employers should pay careful attention, especially those with an interest in the notoriously cost-sensitive care sector.
This isn’t just a case of employers trying to avoid paying tax and National Insurance by categorizing workers as self-employed contractors (although in some examples this is pretty obviously the case, and this is reprehensible). According to Tammy, it’s about the rapidly-changing relationship between employers and the workforce, because expectations are shifting significantly at both ends of the employment journey.
At one end, millennials are now entering the workforce in growing numbers. They know that the old unspoken understanding of the “job for life” is dead. They know that the odds of a pension providing a really meaningful income at the far end are similarly deceased. They know that they might not be able to afford to support a family until their 30s, and might not be able to buy a house until their 50s, if then. They prioritize their lifestyle over their income and value experiences over possessions.
Meanwhile, at the other end of the scale, Generation Xers (my own) are coming to terms with the fact that retirement at 60 just isn’t going to happen. Nor at 65 and possibly not at 70 either. More and more of us are – not altogether reluctantly – acknowledging that we might never retire.
With 13.5 million job vacancies expected to arise in the UK alone over the next ten years, and only 7.5 million school leavers expected to enter the market, it’s fairly clear that there’s room for both groups to get what they want, and the pressure will be on employers, competing for a scarce resource, to give it to them. And what both groups want is convenience and flexibility. Little surprise, then, that we see the rise of both zero-hours contracts and the even-more-tax-efficient “self-employed contractor (but not really)” that has caused such confusion and frustration at employers as diverse as Deliveroo, Uber and Pimlico Plumbers.
What about the third sector, then?
We are primarily driven by the desire to ensure that as much of our expenditure as possible goes on our primary purpose. If, like Age UK Gloucestershire, the primary purposes is improving the lives of older people, then we want to spend as much money as we can actively improving older people’s lives! So options to reduce our tax bill and staff costs and get more money into transformative services are good things.
But third-sector bodies are also driven by a general sense of compassion and philanthropy. Let’s be honest: one of the reasons charities are notoriously bad at firing incompetent employees is because we’re basically too nice. That’s one of the reasons we find ourselves drawn to working in this sector! And this fundamental niceness is also reflected in our commendable desire not to abuse our workforce even to the benefit of our primary purpose.
The tension between these two compulsions can push third-sector bodies into a balance between cost and compassion: a compromise that often comes at the expense of legal clarity over a person’s employment status.
We need to be alert to how our frontline workforce, in particular, is being used by managers. Do you know what the criteria are under which a self-employed contractor might be considered to have become a worker by default? Do you know the point at which a worker acquires the full rights of an employee? Do you understand the risks of allowing these borders to become blurred at a time when contracting social care budgets and increasing scrutiny of cost-effectiveness in social care outcomes will put the delivery of some well-established projects and services in line for closure?
With media scrutiny of both employment relationships and charity service providers intensifying, we cannot afford to be ignorant or for any part of the legal basis of our relationships with our workforce to be unclear. Change will mean new opportunities, but without being sure what you’re doing now, you won’t be ready to respond or have the information you need to know what’s going to be best for you organization.
With the government’s review now underway, there can be no more apposite time to make sure that Boards, CEOs and senior leaders in your organization know exactly what the risks are and to clarify the position to everyone.