Employers are ducking tax liability, the minimum wage and denying workers their rights by forcing them into sham forms of self-employment.
The Trades Union Congress (TUC) – a federation of UK trade unions – shared these findings in a new report. It said that two million people aged 25 and over in the UK earn less than minimum wage. And sham self-employment, which includes some gig economy workers and people who are contracted through a personal service company, is a root cause.
Self-employment on the rise
Self-employment has accounted for a growing share of the workforce in recent years. It is estimated that self-employment has risen from 12% of workers in 2001 to 15% in 2018.
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But, according to TUC, the self-employed earn considerably less than those in employment. In 2016/17 they earned on average £12,300, compared with £21,600 for those in employment.
The two million people in low-paid self-employment are part of at least 3.7 million people in insecure jobs. The other 1.7 million include agency workers, casual workers, seasonal workers, and those whose main job is on a zero-hours contract.
Workers stuck on poverty pay
“Self-employment can be a great option. But it’s clear that it’s not working for everyone, with millions of self-employed workers stuck on poverty pay,” TUC general secretary Frances O’Grady said. “Too many workers have been forced into sham self-employment – like at Uber and Hermes. It’s not about helping workers, it’s all about companies dodging tax, ducking the minimum wage and denying workers their full rights.”
Government must do more
TUC said that, so far, the government has failed to tackle insecure employment. Further, it has ignored recommendations from the Taylor Review into modern working practices.
“Theresa May promised to change things for ‘just about managing’ families, but she’s done nothing,” O’Grady explained. “She should be cracking down on businesses that use sham self-employment. She should ban zero-hours contracts. And she should give agency workers the right to equal pay to stop undercutting and encourage employers to create more permanent jobs.”
To rectify the situation, TUC urges the government to take action and commit to the following:
- Take steps to ensure workers enjoy the same floor of rights as employees, including redundancy pay and family-friendly rights
- Ban zero-hours contracts to ensure workers get guaranteed hours, allowing them to pay bills and plan childcare
- Ensure equal pay for agency workers by ending the Swedish Derogation which acts as an Undercutters’ Charter
- Allow trade unions to access workplaces, to support workers most in need of representation
- Increase resources and powers for enforcement, so that dodgy employers have nowhere to hide.