Chancellor announces coronavirus proof budget but fails to protect flexible labour market by greenlighting IR35 go-ahead

Newly appointed Chancellor Rishi Sunak has delivered the government’s much-awaited budget. Brexit and the IR35 reforms were pushed to the inside pages of the Red Book, as the Chancellor set out his plans to protect the UK economy from the impact of coronavirus.

Coronavirus support provision

Despite acknowledging the significant impact that the coronavirus will have on the UK economy, the Chancellor maintained that this impact will be temporary and well managed by government.  Several new measures were unveiled to help the economy cope with the potential disruption to supply chains, labour and demand.

The range of measures included:

  • Emergency legislation to allow Statutory Sick Pay (SSP) to be paid from the first day of sickness absence, rather than the fourth day, for people who have COVID-19.
  • ‘New style’ Employment and Support Allowance will be payable for people directly affected by COVID-19 or self-isolating according to government advice for from the first day of sickness, rather than the eighth day.
  • A government refund for small and medium-sized businesses and employers to cope with the extra costs of paying COVID-19 related SSP. This refund will be limited to two weeks per employee and for employers with fewer than 250 employees as of 28 February 2020.
  • A Coronavirus Business Interruption Loan Scheme to support SMEs.

We are pleased to see the government commit to supporting business through the coronavirus, we await further details. We are concerned however that many of our members who supply temporary workers will not have access to the support on offer if their temporary workers are included in their payroll. Temporary workers on payroll typically fall within the ‘employee’ definition.

We will raise this with government as details emerge. Once the emergency legislation is published we will update members via our dedicated Coronavirus Hub.


The Budget represented a missed opportunity by the Chancellor to ensure the stability of the UK labour market by delaying the extension of IR35 into the private sector. Although the Chancellor failed to give mention to the reform during his speech, there was confirmation in the Red Book that the changes would be going ahead on 6 April. Further details on the reform will be included in the Finance Bill which is set to be published on 19 March. The REC is updating model documents and will be releasing the updated documents once the legislation is published. For more information on IR35 reforms please see our IR35 Hub.

Apprenticeship levy

Another important area the REC has been campaigning on, which was left out of the speech but included in the Red Book was the Apprenticeship Levy. The REC has been calling on the government to broaden the Apprenticeship Levy into a training levy that benefits agency workers and facilitate progression routes in key sectors which struggle to attract UK workforce. The government has promised to improve the working of the Apprenticeship Levy, so that it can better support large and small employers in meeting the long-term skills needs of the economy. A consultation on this is expected sometime later in the year.

Ornella Nsio - Stakeholder Engagement Manager

Image credit | Shutterstock

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