As many as 460,000 people could be ‘bogusly self-employed’ and as a result be missing out on valuable benefits, such as holiday pay, Citizens Advice has claimed.
In a new report, the charity highlights how unscrupulous employers can compel staff to be self-employed when they should in fact have employee status. This means employers can avoid paying the minimum wage, employers’ national insurance, sick pay, holiday pay and pension contributions.
Citizens Advice surveyed 491 people who identified as working for themselves, but found one in ten of them could be wrongly self-employed. Based on this figure the charity reveals bogus self-employment could cost the Government up to £314m a year in lost tax and employer national insurance contributions.
Responsible employers can also lose out as firms that force people into self-employment can use the savings they make to undercut competitors’ prices.
As part of Citizens Advice’s self-employment campaign it is calling on the Department for Business, Innovation and Skills to use the Government review into self-employment to address key issues including:
- Clarity and consistency around the definition of self-employment.
- Support for people looking to save for retirement.
- Pay for parental leave.
It points out that Government departments, including HMRC and the Department for Work and Pensions, have different definitions of self-employment, making it hard for workers and businesses to be clear about employee status.
The only way to prove employee status and secure the rights this provides is to go to an employment tribunal, a lengthy process which many cannot afford since fees were introduced in 2013. Last year research from Citizens Advice showed that seven in ten potentially successful cases are not pursued by people at Employment Tribunals.
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