In General

The Freelancer and Contractor Services Association (FCSA) has learned that Labour intends a questionable clampdown on bogus self-employment and a blanket ban on Umbrella Companies if it is successful in the General Election next month.

Labour plans to shift the burden of proof on a worker’s status by assuming in law that all workers are employees unless employers can prove their self-employment status.

The FCSA’s CEO, Julia Kermode, pointed out that a default assumption that a worker is employed unless the hiring business can prove otherwise “would have a devastating impact on UK businesses and ultimately the economy.”

Acknowledging that cases where there might be exploitation require some form of regulative intervention to prevent bad practice, Ms Kermode emphasised that rolling out this particular policy across the entire workforce would create an unnecessary barrier to genuine self-employment. It would, she said, abolish the right of individuals to choose how they work and prohibit the flexibility enjoyed by many.

Furthermore, there are no fewer than 84 statutory benefits and rights that accompany employment status. It is impossible to imagine employers being prepared to provide those benefits to genuinely self-employed workers, Ms Kermode said, adding that it is “ludicrous” to expect someone engaging a gardener to have to prove that that person is self-employed.

The end result, she warned, could effectively be no contingent workforce whatsoever, an outcome that would unjustly penalise the 4.8 million people who have chosen to work in this way.

On the Labour manifesto commitment to abolish Umbrella Companies, Ms Kermode said: “Corbyn and others clearly don’t understand how Umbrellas work. Umbrellas allow contractors to be able to work independently for a number of end hirers and provide contractors with full employment rights, all statutory benefits including holiday pay, maternity pay, paternity pay, sickness pay, pensions, redundancy pay and adoption pay. It would be foolhardy to ban Umbrellas unilaterally considering that this sector is worth more than £3bn in tax and National Insurance contributions to the Exchequer annually.”

She underlined the fact that the FCSA has a good track record in successfully changing fixed views about Umbrellas. By talking with MPs, trade unions and others, the trade body has irrefutably demonstrated the benefits of Umbrella Services with the result of always successfully conveying the FCSA perspective.

Instead of a blanket ban, which simply reveals a lack of thought, consideration and understanding, Ms Kermode said it would be far preferable for the FCSA to work with Labour on initiatives that foster compliance and support people who actively choose to work via Umbrella Companies.

She added: “A blanket ban on Umbrellas is not the way forward.”

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