Whilst many in the UK’s freelance community work through umbrella companies or limited companies, some, especially in the construction industry, are paid through specialist payroll companies. However, the darker side of payroll outsourcing has recently come to light, leading the UCATT trade union to call on the government to launch an investigation into malpractice. It appears that a small number of payroll companies had been complicit in promoting fake self-employment in the construction industry. As a result of the payroll chicanery, construction managers were able to rehire redundant staff to do the same work as before, only this time minus all the rights and protections they had enjoyed as employees.
The Freelancer and Contractor Services Association (FCSA) has been quick to respond to the news, with the organisation’s chairman, Stuart Davis, issuing a robust condemnation of the practise. However, he also pointed out that not everyone on an agency payroll need be worried – most payroll companies are completely ethical. Those that adhere to the FCSA’s Code of Conduct, which unambiguously prohibits activities such as this, are all fully complaint with the law and can be trusted by both contractors and employers seeking freelance staff.
The Recruitment and Employment Confederation (REC) also maintained that the status of sub-contractors in the construction industry was carefully verified by close co-operation between HMRC and construction companies. The chair of the REC’s construction division, Simon Noakes, said that he fully supported the effective implementation of currently existing regulations, but maintained that it would be an exaggeration to conclude that large numbers of contractors were being forced into phony self-employment. There are many workers in the construction industry who willingly chose to work as contractors.