UK’s labour market tsar calls for crackdown on bogus self-employment

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The official charged with tackling labor exploitation has warned that the UK government must act to stop bogus self-employment if it is to succeed in its flagship overhaul of workers’ rights.

Margaret Bills, independent director of labor market enforcement, told the Financial Times in an interview that the employer Ministers may avoid new obligations to their staff if they continue to delay legislation to clarify the status of workers.

“I’d like to see a little more urgency. . . You can consult until the cows come home, but sometimes the government just has to make a decision,” said Bill. Echoes of anxiety A critical set of measures from the employment rights bill has been raised by unions and business groups.

The bill, introduced in Parliament last year, made sweeping reforms to give UK workers more protection. But it does not tackle a problem that Labor has previously promised to address: the potential for employers to exploit ambiguities in UK law on workers’ status.

Instead, the government said it would consult at length on how to create a simpler framework, with a single status of worker and a clear distinction between employed and self-employed.

Bills said there is a risk that leaving the issue until later will allow employers to avoid their new responsibilities by hiring gig workers.

The three types of employment status in the UK are unusual: employees, self-employed and a category between “organ (B)” workers, and it is often difficult to determine how people should be treated.

Workers in the third group have more protection than the self-employed but lack some key employee rights that the Labor government plans to strengthen through the ERB, such as statutory sick pay, redundancy rights and protection against unfair dismissal.

Crucially, they are treated as self-employed for tax purposes, creating a big incentive for businesses to use contractors instead of employees, especially after a £25bn budget increase in employers’ national insurance.

But an increase in bogus self-employment is just one of the risks of the bill, as the government enshrines the new rights in law, without specifying how much money will be made available to enforce them.

The complexity of the UK’s employment system, where staff can be recruited by one organisation, employed by another and someone else can be told what to do, makes it difficult for individuals to exercise their rights, he said.

But the UK’s under-resourced enforcement agencies struggle to enforce existing labor market rules. Three main agencies — HM Revenue and Customs’ minimum wage enforcement team, the Gangmasters and Labor Abuse Authority and the employment agency Standards Inspectorate — are set to merge. A new Fair Work Agencywith a wide remit.

Bill’s role was created by the previous Conservative government to improve coordination between agencies, define their strategy and prepare for this merger.

It had proved a frustrating task, he admitted, with ministers repeatedly failing to follow through on promises to create a single body.

“I described myself as a John the Baptist figure, saying prepare the way, this great thing is coming. . . And it never came,” said Bills, former chair of the GLAA and former director of Scottish Gas

The Fair Work Agency is now taking shape under Labour, and Bills, whose own office will be disbanded once the agency is created, is intent on making it a success.

Boosting its profile will be important. “Transparency is really important. . . employees know what the organization is doing and how effective it is,” he said.

Even without new funding, creating a single enforcement agency would make it possible to allocate resources more effectively, he stressed.

Funding for the three agencies totals just over £40mn in 2023-24 – of which £31.2mn was for HMRC’s minimum wage team. Resourcing for FWA will be determined in this summer’s rigorous spending review.

Existing restrictions meant the GLAA and EAS did not have the power to “lift stones” and investigate the extent of exploitation in the construction sector, which has been identified as high risk, he said, indicating that resources would come under new pressure as the agency’s remit expanded. .

Bills made the message clear to a cross-party committee of MPs earlier this month, saying: “If anyone thinks we’re going to raise standards by throwing three budgets together. . . That is not the case.”

“The resources available to the Fair Work Agency need to be a step change to tackle,” he added.