From the TUC

False self-employment: The scandal hitting workers and taxpayers

21 Dec 2012, by in Working Life

Rachel Reeves and Chuka UmunnaBogus self-employment is a scandal that continues to undermine employment rights and hit taxpayers’ pockets. There are too many cases of employees being classed as self-employed when in practice they work for a single company, meaning they can be sacked without warning, do not receive holiday or sick pay, have reduced benefit entitlements and are also denied access to employment tribunals. Often desperately searching for employment, workers are made to sign contracts with payroll companies which sign away their basic rights.

At the same time rogue companies are using bogus self employment to avoid paying National Insurance, whilst there are numerous reports of the status being used at the top end of the salary scale by individuals as means of avoiding tax.

We have recently launched an investigation into the problem as part of Labour’s policy review. This week, we have sent letters to key stakeholders asking for written evidence and we have opened the review on the Labour Party’s Your Britain page. We are eager to speak to employers, employees, trade unions and other organisations on what action we can take to stamp out false self employment for good.

This issue needs tackling urgently – the economy is flat lining and long-term unemployment is on the rise. We need to support people at work, not make it easier to fire them. And when UCATT has estimated it costs the Treasury £1.9 billion each year in the construction industry alone, we must look to find a solution to this problem for the good of the public finances. Families up and down the country are losing an average of £511 this year due to freezes and restrictions to benefits and tax credits and when police, health and school budgets are being squeezed, it is absolutely critical that everyone pays their fair share of tax.

We recognise that safeguards are crucial to ensure those who are genuinely self-employed, like many members of BECTU or the Musicians’ Union, are not unfairly penalised. But it is time that the scandal of false self-employment is solved. We urge organisations and individuals to come forward and help us find a solution.

GUEST POST: Rachel Reeves  is Shadow Chief Secretary to the Treasury and Member of Parliament for Leeds West. Chuka Umunna is Shadow Business Secretary and Member of Parliament for Streatham.

10 Responses to False self-employment: The scandal hitting workers and taxpayers

  1. soiniciulacht
    Dec 21st 2012, 3:19 pm

    We also need unemployment figures that take into account the fact that every person forced onto workfare is immediately take out of the unemployment figures giving an added incentive to force people into unsuitable positions. , including the disabled:

  2. Tony Barlow of Deaf2Work
    Dec 21st 2012, 3:55 pm

    Not only the workers rights are being undermined through this practice, I also need to shine a torch on employers using recruitment agencies to pass on the onus of employers’ duty of care. Flexible yes. Employment stability no.

  3. Joe Bailey
    Dec 22nd 2012, 11:43 am

    Ethical procurement the trade union movement should pursue a policy of obligated ethical and equality
    procurement in Local Government and the public sector
    in general. There is an £160 billion spend on public procurement
    The amalgamation of local authority purchasing power
    now enables councils to enter clauses in contracts
    with suppliers. It is of paramount importance to
    public sector trade union members that suppliers to
    local government their employees pay national
    insurance and tax. Sustainable hiring local labour and high environmental standards and responsibility.

     That all ethical procurement clauses are exempt from confidentiality provision in contract.
    That all publicly funded contracts are published in open accessible formats. That all publicly funded contracts with confidentiality clauses have complimentary clause with a sunset clause when these contracts will be open to publication on open access.
    That all contracts comply with equal opportunity and European human rights
    legislation. This would include the outlawing of blacklisting trade unionist and health safety campaigners.
    Employees of suppliers are obligated to pay taxes and
    appropriate NHS contributions. Their employers may
    seek to avoid tax — scams to not pay NHS contributions these
    loopholes should be closed. All employees and
    employers should be open to auditory scrutiny if
    public money is to be spent ethically. Local
    authorities and publicly funded bodies are aware of
    corporate responsibility to their citizens.  
    That the TUC produce reports effects of ethical procurement

    Of HxS victimization bullying whistleblowers etc has on trade Union
    members. Even if a project only sign posted the discussion
    it would be of value in the future. Their stories could be
    archived and used for reference.
    working not paying NHS contributions may not receive a
    pension . The TUC to report on the implications of poverty in pensioners who have not paid sufficient national insurance contributions. The TUC should campaign with local and those representing pensioners to address to make representation on theses issues with local and national government.
     Councils should be obligated to treat their citizen as human being and not things.

  4. Rob
    Dec 22nd 2012, 9:18 pm

    This issue needs tackling urgently? *This* issue? There’s nothing more pressing than this?

  5. Rich Tee
    Dec 22nd 2012, 11:27 pm

    Reeves doesn’t even pay her interns the minimum wage.

    This year she got round the minimum wage legislation by offering an internship as a prize in Red magazine.

  6. Labor law posters
    Dec 24th 2012, 6:59 am

    Anything can be false, even self-employment. It seems that every one can be replaced, and that bring great pressure on us. Some immoral employers take advantage of the pressre and make us sign unfair contract. Shame on them!

  7. treborc
    Dec 28th 2012, 11:36 pm

    This issue has been around for a long long time, and of course the arguments for workfare are and have been labours problem.

    last month I was dragged into a meeting to discuss my next training course, I’ve done god knows how many now, and the fact is for the last six years I’ve applied for 3700 jobs and have had no interviews, but I’ve been employed by the council on training programs for the six years from picking up litter to filling in forms to running to the shop, in my wheelchair mind you.

    The fact is I’ve been doing this under a labour government and a Tory one, so whats the difference.

  8. Construction Worker
    Dec 30th 2012, 9:53 am

    This happens a lot in my industry, which is pretty much how it should work. People are required for a particular project which may last 4-6 months for example. It makes sense to use freelance staff.

    And they forget to mention that as a freelance member of staff, you can claim back an awful lot as expenses, such as milage or bus fare, meals, clothing, tools etc.

    It’s not quite as generous as the trough that MPs award themselves… Nothing is, but it seems that them seeing anyone who does a real days work getting any kind of reward like their’s disgusts them.

    Leave my industry alone, please. You did enough damage last time.

  9. smokee tokess
    Dec 31st 2012, 1:15 am

    many are doing this now for tax reasons, and if you are in a skilled profession and get good contracts, is worth it

  10. Disgruntled Knome
    Jan 16th 2013, 2:20 pm

    The transport industry is moving heavily towards using nothing but agency workers.
    Rather than offer a job with all the legal safety nets involved its now very much a case of if they don’t like a worker they can just drop them and get another.

    And a prime example and one I have been target for in transport is refusing to take a vehicle out because it was not safe for the road.
    Examples included a leaking diesel tank, stripped wheel nuts, loose steering wheel, worn out tyres well beyond legal depth and leaking air lines!

    But drivers are going out regardless for fear of not getting paid, even though the law dictates they are liable (this I also found applied to those in proper employment too) and hope to god they don’t get caught.

    So, we have a double edge sword, appalling employer ethics and utter contempt for other road users and willingly and knowingly putting peoples lives in danger.

    Its a serious issue, that’s getting worse with the adoption of using nothing but agency’s rather than setting on employee’s and is long over due as are many problems for getting attention.