New EU Directive for Self Employed

Following the Agency Workers Regulations, further EU legislation is on the way that is aimed at giving  more rights to  self-employed workers and their ‘assisting spouses’- including the right to maternity leave for the first time – under new legislation endorsed by EU governments on June 7, 2010.

 ‘Assisting spouses’ means those who  provide effective assistance in the business of the self-employed worker and do not have their own income from another professional activity or a substitute income that entitles them to full social security benefits.
According to Adrian Marlowe, Managing Director of Lawspeed, for the most part, the entitlement to leave, and some compensation for the pregnant self-employed worker, is already provided for in existing social security legislation. The proposed directive only expects the maternity leave rights to be extended to the self-employed and their assisting spouses for  14 weeks. Maternity leave currently only applies to employees not the self employed although they already have an entitlement claim a maternity allowance for up to 39 weeks so there is unlikely to be any change. The main effect of the proposed Directive is in the way it extends the protection of social security to those ‘assisting spouses’ of self-employed workers.

Currently in the UK, self-employed workers, who are not entitled to statutory maternity pay (SMP), may be entitled to Maternity Allowance provided that they satisfy a number of criteria, including that they have been registered self-employed for at least 26 weeks in the 66 weeks up to the week before the week the baby is due.

Maternity Allowance is paid for maximum of 39 weeks (the same period as SMP is paid) and is paid by the state. The proposal advises that payments to the self-employed would be cost-neutral across the EU, and would be met by contributions by the self-employed and taxation. The cost of meeting the level of protection  that is proposed for assisting spouses, could be passed on to self-employed workers through a proportional contribution.
As some agencies use self-employed workers the big question is who is going to pay for this? The answer is almost certainly not the agencies,  although we do have to be mindful of the amendments made following the Agency Workers Directive to the entitlement of pregnant agency workers to pay throughout the period of their assignment even if the hirer has determined it on health and safety grounds. In the current economic climate the most likely conclusion is that all self-employed workers will have to pay into the pot to meet this Directive’s requirements.

 “It will be interesting to see how the proposal is transposed into UK law in due course” concludes Adrian Marlowe, ” particularly the idea being mooted that self-employed workers pay for the measures, may be open to question given the need to reduce the cost burden on self employed entrepreneurs.  However as most Governments are strapped for cash at the moment, it is difficult to see how this can be funded in any other way.”
The proposed Directive is expected to become law in the EU within the next few days with a date for transposition into UK law within 2 years.


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