HMRC employment status challenges are getting to be pretty big news now, and there’s every reason to believe we’ve only seen the tip of the iceberg so far.

With recent high-profile cases ranging from the BBC to Uber, it would be tempting to think of the trend as a rolling snowball, gathering mass and momentum as it goes. The problem with that analogy is that we really aren’t looking at just one snowball.

Employment status challenges aren’t a single phenomenon with a single cause or cure. Even subtle differences, such as who originally instigates the challenge, can make a huge difference to the eventual impact – and who actually feels it. There really isn’t a one-size-fits-all solution to the issue of status challenges, and in some very important respects it would be a mistake to hope or hunt for one.

With cases like Uber and Deliveroo, we’re talking primarily about protecting workers’ rights. Right now, the argument goes, there are people being denied basic things like holiday pay and access to the national minimum wage. Disputes like this are often going to be started from the workers’ side, and resolved accordingly. The case against the BBC, on the other hand, is a very different situation. Here it’s HMRC itself that’s driving the investigation, over concerns that Income Tax and National Insurance obligations aren’t being met. The rights of the affected presenters aren’t the focus, and the path the process takes will reflect that.

The main point to take away from all this is that HMRC is tightening up and both companies and workers in every sector are going to need to act quickly to avoid trouble. Many firms risk being left with huge bills for workers they’ve always considered to be legitimately self-employed but who will not fit that criteria under the new guidance. In many cases, they honestly won’t realise they’ve been doing anything wrong. They’ve simply settled into working arrangements that suit their industries and offer flexibility to their workforce.

While HMRC’s goal is, at least in part, to tackle false self-employment and ensure workers are getting the rights and benefits they deserve, there’s a very real danger that the genuinely self-employed will now have much more trouble finding contract work. Companies are going to be increasingly wary of HMRC status challenges, and there’s no easy fix for that while so much uncertainty surrounds the system. Experience tells us that it takes around 2 years for an average status challenge to be resolved. It’s an expensive process, in opportunity costs as much as legal and administrative expenses. There’s also a stigma about being investigated, which can cause a lot of damage to a firm’s reputation.

The construction sector is going to feel this harder than most, due to its very specialised ways of working and heavy reliance on a largely self-employed workforce. The government in recent years has been putting a lot of effort into encouraging people to start their own businesses, with self-employment soaring since the economic downturn. The case law surrounding false self-employment developed under very different conditions, both socially and economically, and has left construction firms extremely vulnerable.

When I founded RIFT in 1999, my aim was to offer a helping hand to firms and workers in the construction industry. The experience we earned and the relationships we built with workers, employers, unions and HMRC allowed us to see 2016 coming as the year when practical help would be needed in dealing with status challenges and agency legislation. Keeping up-to-date with the latest legal rulings is practically becoming a full-time job. The RIFT Legal service is designed to help businesses stay compliant, so they never get caught out believing they’re within the law only to find themselves on the wrong end of an HMRC ruling. Our team is uniquely qualified for the job, combining a full understanding of the applicable legislation with long-term experience of dealing with HMRC and the construction industry.

There are plenty of dogs in this fight, and RIFT Legal is well placed to work with them all. From HMRC’s perspective, converting even 10% of self-employed workers to employee status could mean an extra £1 billion per year in National Insurance contributions alone. Trade unions and groups have long campaigned for workers to be employed directly, a call that’s only growing louder with the rise of the so-called “gig economy”. Companies, meanwhile, are finding themselves squeezed from all sides trying to balance the needs of their workforce, pressure from HMRC and the realities of their industries.

Every case that works its way through the employment status challenge system is different, and precedents are still being set in how they’re handled and resolved. RIFT Legal is committed to ensuring that interested parties are able to work together to the benefit of all. At the end of the day, our objective is for people to have the freedom to operate in a way that suits both them and the organisations they work for. Pushing toward that balance in each disputed case is in the best interests of workers, businesses and society as a whole.

Over the coming weeks my team will writing on this topic in Construction News and we’ll be issuing a White Paper to take you throught the practical steps you need to take to ensure you’re compliant, as well as busting a few dangerous myths on the way.

If you need any help or advice regarding employment status challenges then have a look our RIFT Legal Services website.