By Jonathan London on 24th August 2015

New report highlights impact of bogus self-employment

A number of unscrupulous bosses are using the self-employment model as a means of scamming their workers out of rights they deserve, according to a new report.

The study from Citizens Advice surveyed 491 people who identified as working for themselves and found one in ten of them could wrongly be taking on self-employed status when they should in fact be full-time employees.

In many cases, employers compel staff to be self-employed instead of claiming full employee status, as this allows the company to avoid paying the minimum wage, employers’ National Insurance, sick pay, holiday pay and pension contributions.

A combination of factors can contribute to a worker having the right to be classified as an employee, including the number of hours they work, their use of business equipment and having tax deducted from their pay by their boss.

According to the report, the falsely self-employed lose an average of £1,200 per year in holiday pay and have to contribute an extra £61 per year in National Insurance.

It was also noted that this problem goes beyond being an individual issue, as bogus self-employment is estimated to cost the government up to £314 million a year in lost tax and employer National Insurance contributions.

Moreover, firms forcing people into self-employment often use the savings they make to undercut competitors’ prices, meaning responsible companies will also suffer as a result of their bad conduct.

Gillian Guy, chief executive of Citizens Advice, said: “Working for yourself should be an empowering experience, not an opportunity for rogue firms to siphon away benefits like sick and holiday pay.

“With our research finding two in three self-employed people are happy with their work status, it is clear the majority are thriving in start-up Britain.  But there are workers who are missing out on over a thousand pounds a year because they should legally be official employees.”

Jonathan London Written by Jonathan London

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