What is dependent contracting?

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The Taylor Review, announced 10th July 2017, suggested changes to employment practices and an attempt at redefining worker categories. Within the review, a new category of worker was suggested; dependent contractor, which appears to replace the previously named gig worker.

This redefinition intended to bring a greater degree of clarity between the different forms of worker – employee, self-employed and dependent contractor. The dependent contractor seems to be intended to be the intermediary status which sits between the fully-employed and self-employed.

Whilst these changes may be unclear, we understand that many contractors are beginning to question whether this will affect them and what changes are set to come. We’ve put together a handy guide based on our understanding of the suggestions made in the Taylor Review, which may help.

What is a dependent contractor?

A dependent contractor is a subcontractor who undertakes work for a company for an unspecified period of time. The dependent contractor or ‘gig economy worker’ is usually reliant on the company to provide work. This type of employment has long been associated with job insecurity and a lack of basic employee rights but employment reviews such as the Taylor Review are looking to change this.

What rights could I have as a dependent contractor?

The new changes announced are set to improve the rights of the gig economy worker and provide greater job security. It was suggested that dependent contractors could expect to receive the same benefits as full-time employees, including sick pay, holiday leave and maternity/paternity leave. These changes could also mean that workers will be obligated to pay National Insurance contributions and taxes.

Additionally, there was evidence to suggest that that workers who fall into this status could have the potential to take home more than the basic minimum wage, as companies may need to pay their workers for tasks completed rather than the number of hours worked, with the opportunity to choose when to work.

What is the difference between a dependent and an independent contractor?

The changes outlined in the review state that one of the main differences between contractor status would be control: A dependent contractor would generally be expected to have a closer interaction with their employer than their independent counterparts. The review believes that the principle of control is the most important factor when determining whether a contractor is dependent or independent.

The Taylor Review also suggested that the status of a contract will be deemed as dependent or independent on the basis of supervision. This could include the dictation of daily activities, scheduled hours and rate of pay. In opposition to this, an independent contractor may have more control over their work, with no input from an employer. These outlines are an attempt to bridge the gaps between employment status and offer more clearly defined categories as to whether a worker is dependent or independent.

How can Parasol help?

If you are considering taking the first steps into contracting and are unsure about what these new changes could mean, Parasol is here to help. Our team of experts can help to guide you through the process and provide all of the advice you need when it comes to your finances. To speak to a member of our Best Advice team, simply call us on 0800 464 0513.

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