Securing Meaningful Change for Self-Employed Workers

This guest blog has been written by Philip Ross, a freelancer in cyber security who is co-chair of Community Union’s self-employed committee. 

Self-employed workers are on the march. We are making our case to Government, the Trades Union Congress (TUC) and the Confederation of British Industry (CBI), and we are seeing results because we have demonstrated resolve and determination, backed by well-developed policy and action in the workplace.

The economic landscape has changed. The world of work has changed too. It is vital that workers are protected and empowered regardless of whether they are employed, self-employed, or fall somewhere between those categories.

During COVID, Andy Burnham stood with self-employed workers who were being denied support. These were the same workers who had been easy enough to identify for tax purposes but suddenly became difficult to identify when support was needed. The self-employed were being let down then, and many are still being let down now.

Tax reforms have created insecurity for self-employed workers

It is wrong to suggest that the only policy concern for the self-employed is taxation. Our case has always been about fairness and certainty. Yet it is fair to say that tax reforms introduced by previous governments have undermined both. The cumulative effect has been to increase insecurity for the UK’s 4.2 million self-employed workers.

Philip Ross, co-chair of Community Union’s self-employed committee.

IR35, or the off-payroll working reforms, continue to distort and threaten the labour market. Organisations are understandably anxious about potential tax liabilities and, in response, many have chosen to ban the engagement of self-employed workers operating through their own limited companies or Personal Service Companies (PSCs). Instead, they engage workers through umbrella companies.

This has created a system that is legal but often artificial. Workers are treated as the “employees” of umbrella firms while the end client avoids responsibility for employment rights and protections. In some cases, genuinely self-employed workers have been dismissed and then required to return under umbrella arrangements. This is effectively “fire and rehire” by another name. Labour has pledged to end fire and rehire practices and must ensure that commitment extends to self-employed workers as well.

Others are forced to contract directly with organisations but are told they are employees only for tax purposes. No employment rights accompany this classification. They are expected to pay the taxes of an employee without receiving the protections of one.

Whether workers are channelled through umbrella companies with manufactured employment relationships or subjected to “employee for tax purposes only” arrangements, this loophole must be addressed through the forthcoming Employment Status Bill. How Labour approaches this issue will be a significant test of its commitment to fairness at work.

Trade unions can lead the fight for change

Some argue that self-employed workers cannot form part of a trade union because there are no employment rights to defend. When Labour raised this question with us, our response was simple. Self-employed workers should have rights at work, including:

• The right to be paid on time.
• The right to a written contract.
• Protection from discrimination.
• The right to trade union representation.

That final right is particularly important in the context of “fire and rehire 2.0” and other forms of workplace insecurity such as challenging Status Determination Statements (SDSs).

These measures are already on Labour’s agenda. There has also been discussion in recent years about creating a single worker status. While that remains possible, it appears more likely that the Government will pursue a system of “presumptive determination” or something similar.

Under such a model, workers would no longer bear the burden of proving that they are employees or workers. Instead, the presumption would be that employment rights apply, and it would be for the employer or client to demonstrate otherwise. As a union, we see this as a powerful tool for challenging sham employment arrangements. It would enable decision-makers to look beyond contractual structures and identify the true nature of the working relationship. Similar principles already exist within IR35 and could be extended into employment rights law.

The same week that the TUC adopted Motion C03, calling for action on IR35 and an end to discrimination against self-employed workers within the trade union movement, we could see the direction of travel becoming clearer. Change is coming, and this time it has the potential to be positive change.

We have also presented our views to more than 50 major businesses through the CBI’s Employment Taxes Working Group. Those discussions revealed a surprising amount of common ground. Many employers recognise that the current system creates uncertainty and complexity for businesses as well as workers.

Business Secretary Jonathan Reynolds has also called for a crackdown on bogus self-employment, a position that touches directly on many of the issues we have been raising.

As a trade union, we are learning an important lesson. Our ability to represent workers is linked directly to the number of workers we represent. Those numbers are growing. As we continue to represent contractors in the workplace and successfully challenge issues such as flawed SDSs, our influence will grow further. With that growth comes a greater ability to secure meaningful change for self-employed workers across the UK.