Government must extend wage assistance to help construction's million plus bogus self-employed
- Sunday 22 March 2020
Unite, the UK’s construction union, is calling on the government to extend its wage support scheme announced last Friday (20 March), to protect the million plus workers trapped in bogus self-employment in the building industry, during the coronavirus crisis.
Unite is in the process of urging the government to extend its wage scheme to immediately cover workers paid via the Construction Industry Scheme (CIS) and those paid via umbrella companies and payroll companies.
A Freedom of Information request made by Unite last year found that 1.03 million construction workers were paid via the CIS scheme in 2018/19, the vast majority were bogusly self-employed and paid on a weekly basis. A further 300,000 construction workers are paid via umbrella companies.
Prior to the government’s employee assistance scheme being announced, Unite recommended that all self-employed workers who are taxed at source (which would encompass CIS workers) be treated as workers, and all workers including those paid by CIS, should be considered to be employees for the purpose of the scheme.
With construction sites in the UK already reducing the number of workers employed as a result of the coronavirus crisis, and further closures expected in the coming weeks and months, urgent action is needed to protect these workers who are denied even the most basic employment rights.
The situation in construction is made even more precarious since the vast majority of major contractors employ few if any construction workers on their sites. Instead work is sub-contracted (often repeatedly) and workers are recruited via labour supply companies or agencies. If the decision is taken to close or mothball a site, the main contractor has no direct employment responsibility for the workforce.
Unite assistant general secretary Gail Cartmail said: “The UK’s bricklayers, carpenters, electricians and plumbers will be deeply worried that if they are officially self-employed they will not be protected by the government’s scheme.
“Most construction workers are the primary breadwinners in their family and swift action is needed to ensure that they are protected throughout the coronavirus crisis.
“Over half of the industry is officially self-employed, with most of those bogusly self-employed. This is part of the hire and fire culture existing in construction which results in workers being dumped without warning or compensation during downturns.
“In the short term the million plus workers paid via the Construction Industry Scheme (CIS) and the 300,000 plus workers paid through umbrella companies must be brought into the scope of the government’s wage support scheme and Unite will be lobbying government to ensure that occurs.
“In the long term a commission is needed into construction employment to ensure that workers who survive on a feast and famine existence secure proper employment protections.”
Industry sick pay
The need for government intervention has been heightened as the industry has metaphorically washed its hands of the crisis. In early March, Unite contacted the industry and asked that the qualifying time on industry sick pay was waived during the crisis, so workers who were ill or needed to self-isolate as a precaution could do so and not infect others.
The reasonable and modest request has been rejected or ignored by the employers on all the construction industrial agreements. For example the JIB electrical agreement replied: “Whilst we appreciate the reasons behind your request, we cannot agree to an unfunded and potentially open-ended increase to JIB employers’ costs.”
Gail Cartmail, added: “Once again we have been provided with a clear example of how the industry does not take the welfare of its workers seriously, with profits rather than people being its bottom line.”
Notes to editors:
The Construction Industry Scheme (CIS) is a standalone self-employment tax system for the construction industry. Unlike all other forms of self-employment workers are taxed (20 per cent) at source. They are then entitled to make a claim for self-employed expenses. The major beneficiaries are employers as they do not have to pay employees’ NI contributions of 13.8 per cent.
Bogus self-employment occurs when workers are classified as self-employed but they have all the characteristics of a worker yet are denied all employment rights.
Payroll company: Under a payroll company the worker is claimed to be self-employed and is therefore denied basic employment rights, including holiday pay. The worker has money deducted from their weekly pay, in order to be paid in this manner.
Umbrella company. Under an umbrella company the worker becomes effectively the employer and the employee for tax purposes. The worker will have employer’s national insurance contributions deducted from their pay as well as holiday pay. Employer pension contributions are also deducted. Increasingly workers are also having the apprenticeship levy deducted. The worker also has a weekly amount deducted from their pay to be paid in this manner.
For media enquiries contact Unite senior communications officer Barckley Sumner on 07802 329235 or 0203 371 2067.
Unite is Britain and Ireland’s largest union with members working across all sectors of the economy. The general secretary is Len McCluskey.