Government consults over false self-employment in construction

The government has proposed that all construction workers will be deemed to be employees unless they supply their own materials, plant or are supplying other labour in addition to themselves.

In the 2009 Budget the Government announced that it remained committed to addressing the problem of false self-employment in the construction industry and the Treasury has now published a consultation paper.

False self-employment occurs where workers are treated as self-employed for income tax and National Insurance despite the fact that the way in which the work is carried out on a day to day basis demonstrates that there is an employment relationship.

The problem of false self-employment affects not only the ability of compliant businesses to be competitive, but also workers’ entitlement to social security benefits, as well as representing a risk to the Exchequer.

Alan Ritchie, general secretary of construction industry Ucatt, said: “Bogus self-employment corrupts the entire industry. Workers are denied basic rights, they fear being sacked at a moment’s notice, so are unlikely to complain about dangerous working practices. If workers become too sick or old to work they will be denied benefits and will not have an old age pension.”

The Government welcomes comments on its proposal and in particular on the questions raised in the consultation document.

All comments should be received by 12 October 2009.