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Employers claiming employees “self-employed” to save money


Employers are claiming their employees are “self –employed” to avoid paying them holiday pay, the minimum wage, employers’ National Insurance, sick pay and pension contributions.

An investigation by debt charity Citizens Advice found that some employers are convincing their staff to be self employed when they should actually have employee status.

Up to one in ten people who call themselves self-employed could have been wrongly given this status. This could cost the government up to £314m a year in lost tax and employer national insurance contributions.

If an employer sets the hours an employee works, requires the employee to use the businesses equipment or deducts tax from the workers pay, this could mean that an individual should be an employee rather than self-employed.

Citizens Advice has now called upon the Department for Business, Innovation and Skills to use the Government review into self-employment to address key issues, including clarity and consistency around the definition of self-employment.

Gillian Guy, chief executive of Citizens Advice, said:

“Working for yourself should be an empowering experience not an opportunity for rogue firms to siphon away benefits like sick and holiday pay.
“With our research finding two in three self-employed are happy with their work status, it is clear the majority are thriving in start-up Britain. But there are workers who are missing out on over a thousand pounds a year because they should legally be official employees.

“Not only does it cost workers, it also costs the Government through lost tax revenue and undermines businesses trying to do right by their employees. The Government’s review into self-employment is a welcome opportunity to look at how these workers can be more supported.”

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