The NIC proposal was introduced at Budget 2016 and abruptly withdrawn a few days later. In its announcement of the ‘Good Work plan’, the Department for Business, Energy and Industrial Strategy (BEIS) said there are ‘no plans’ to revisit the issue.

The move was welcomed by Mike Cherry, national chairman of the Federation of Small Businesses.

‘Today’s commitment to shelve permanently plans to hike NICs for the self-employed marks a watershed moment. This now needs to be followed-up with delivery of the promise to abolish Class II NICs for the self-employed,’ he said. 

BEIS said the proposals will ensure workers know their rights and receive the benefits and protections they are entitled to, and that action is taken against employers who breach workers’ rights.

They include plans to enforce vulnerable workers’ holiday and sick pay for the first time; a list of day-one rights including holiday and sick pay entitlements; and a new right to a payslip for all workers, including casual and zero-hour workers.

There are also plans to introduce a right for all workers, not just zero-hour and agency, to request a more stable contract, providing more financial security for those on flexible contracts.

Business secretary Greg Clark said: ‘We want to embrace new ways of working, and to do so we will be one of the first countries to prepare our employment rules to reflect the new challenges.

‘We will take forward Matthew Taylor’s recommendations and commit to pursuing the quality of work as well as number of jobs.’

Other elements in the package include further action to ensure unpaid interns are not doing the job of a worker; introducing a new naming scheme for employers who fail to pay employment tribunal awards; and quadrupling employment tribunal fines for employers showing malice, spite or gross oversight to £20,000, and considering increasing penalties for employers who have previously lost similar cases.

BEIS says the government will ensure workers are paid fairly by providing an estimated 1.2m agency workers with a clear breakdown of who pays them and any costs or charges deducted from their wages. It is also considering repealing laws allowing agencies to employ workers on cheaper rates

In addition, the Low Pay Commission will be asked to consider the impact of higher minimum wage rates for workers on zero-hour contracts.

The government also says it plans to increase transparency in the business environment through a number of initiatives. These include defining ‘working time’ for flexible workers who find jobs through apps or online so they know when they should be being paid.

It will launch a task force with business to promote awareness and take-up of the right to request flexible working introduced in 2014, and will seek to raise awareness around the workplace rights for new and expectant mothers, as well as a campaign to encourage more working parents to share childcare through shared parental leave.

BEIS is to launch a number of consultations following its announcement. These will cover the enforcement of employment rights recommendations; agency workers recommendations; and measures to increase transparency in the UK labour market.

There will also be a consultation on employment status, with BEIS stating: ‘The employment status consultation makes very clear that changes to the rates of tax or NICs for either employees or the self-employed are not in scope.’

BEIS also notes: ‘These are complex issues and the government will consider the impacts of these reforms on business and other groups before implementing changes.’

The government is to work with industry to consider ways of encouraging the development of online tools for self-employed people to come together and discuss issues that are affecting them.

Cherry said it was ‘disappointing’ that BEIS’s plan did not include mentioned of ways to address the challenges the self-employed face when applying for mortgages and insurance products. ‘Of course we need to stamp out false self-employment. But what we definitely can’t have is the genuinely self-employed disadvantaged in the process,’ he said.

Report by Pat Sweet