Delivered with all the traditional pomp and ceremony that one would expect the Queen’s Speech was made to the combined Houses of Parliament on 8 May, setting out the Government’s legislative programme for the coming year.
Probably of greatest interest to lawyers and other professionals is the removal of the presumption of self-employed status for members of LLPs. Limited Liability Partnerships were introduced a number of years ago as, effectively, a half way house between “old-fashioned” partnerships governed by the provisions of the Partnership Act 1890 and limited companies. As the name suggests, a particularly appealing aspect of the structure has been to limit the liability of a member or partner to the assets of the business, thereby avoiding the risk of personal financial ruin in the event of business failure. In fact, that benefit has been largely diluted in practice as a result of the tendency of banks, other lenders and even regular contractors to require personal guarantees from the members. However, another benefit has been that members, including fixed share members, have been treated as self-employed for tax purposes on the basis that they are, even if only in a very small part, all owners of the business. That, in turn, is significant because the LLP does not have to pay employer’s national insurance contributions (13.8%) and the tax treatment of the individuals is more advantageous to them.
However, the National Insurance Contributions Bill sets out to put paid to such arrangements. HMRC has long contended that such arrangements are a sham because, in reality, fixed share members are really employees of LLPs. They work under the direct control of the owners of the business and cannot send someone in their place to do their work. Almost invariably they work under contracts that are employment contracts in all but name, often including disciplinary procedures and maternity and paternity provisions which mirror those for employees. Since the change will have a statutory footing there will be little point in LLPs continuing to suggest that these employees (for that is what they are) are self-employed.
Other employment law-related issues include:
- Immigration Bill – Businesses that use illegal labour will face increased fines;
- Pensions Bill – The increase in the retirement age to 67 is to be brought forward by eight years, so it will now come in to force between 2026 and 2028;
- National Insurance Contributions Bill – This bill is designed to reduce the cost to small businesses of employing people. If it passes, from April 2014 every business and charity will be entitled to a £2,000 employment allowance. It also aims to stop the use of offshore companies that are sometimes used by companies to avoid paying their National Insurance contributions.
- Draft Deregulation Bill – This includes exempting from health-and-safety legislation people who are self-employed and whose work poses no risk of harm to other people, and removing the ability of of Employment Tribunals to make wider recommendations in successful discrimination cases, which they were granted in the Equality Act 2010.