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The UK government must act to stop bogus self-employment if its flagship workers’ rights reform is to succeed, the official tasked with tackling labor exploitation has warned.
Margaret Beels, independent director of labor market enforcement, told the Financial Times in an interview that employers They could simply avoid new obligations to their staff if ministers continued to delay legislation to clarify workers’ status.
“I would like to see a little more urgency. . . You can consult until the cows come home, but sometimes the government just needs to make decisions,” Beels said. echoing concerns raised by unions and business groups about the omission of a critical set of measures in the labor rights bill.
The bill, introduced to Parliament last year, covers a broad set of reforms to give more security to UK workers. But it does not address an issue that Labor had previously promised to address: the possibility of employers exploiting ambiguities in British legislation on the status of workers.
Instead, the government said it would need to consult extensively on how to create a simpler framework, with a single worker status and a clear distinction between employed and self-employed workers.
Beels said there was a risk that leaving this issue until later would allow employers to shirk their new responsibilities when hiring freelancers.
The UK is characterized by three types of employment status: employees, self-employed and an intermediate category of “member (b)” workers, and it is often difficult to establish how people should be treated.
Workers in the third group have more protection than the self-employed, but lack some important employment rights that the Labor government plans to strengthen through the ERB, such as statutory sick pay, redundancy rights and protection against unfair dismissal.
Crucially, they are treated as self-employed for tax purposes, creating a huge incentive for businesses to use contractors rather than employees, especially after the £25bn budget increase in employers’ national insurance.
But a rise in bogus self-employment is just one of the risks Beels sees imminent, as the government enshrines new rights into law without yet specifying how much money will be made available to enforce them.
The complexity of recruitment practices in the UK, where workers may be hired by one agency, employed by another and told what to do by another person, makes it difficult for people to enforce their rights, Beels said.
But the UK’s under-resourced law enforcement agencies struggle to enforce existing labor market rules. The three main bodies – HM Revenue & Customs’ minimum wage enforcement team, the Gangmasters and Workplace Abuse Authority and the Employment Agency Standards Inspectorate – will merge into a new Fair Work Agencywith a broader scope of competence.
Beels’ role was created by the previous Conservative government to improve coordination between the agencies, set their strategy and prepare for this merger.
He acknowledged that it proved to be a frustrating task as ministers repeatedly failed to deliver on a commitment to create a single body.
“I described myself as a kind of John the Baptist figure, saying: prepare the way, this great thing is coming. . . and it never came,” said Beels, a former GLAA president and former director of Scottish Gas.
The Fair Work Agency is now taking shape under the Labor government, and Beels, whose own office will be dissolved when the agency is created, intends to make it a success.
Boosting your profile will be crucial. “Transparency is really important. . . workers know what the agency is doing and how effective it is,” he said.
Even without new funding, creating a single law enforcement agency would allow resources to be allocated more effectively, he insisted.
Funding for the three agencies amounted to just over £40 million in 2023-24, of which £31.2 million was for HMRC’s minimum wage team. Resources for the FWA will be determined in this summer’s tough spending review.
Existing limitations meant the GLAA and EAS had not had the ability to “lift the stones” and investigate the extent of exploitation in the construction sector, flagged as high risk, he said, hinting that resources would be strained. new pressure as the agency’s mandate expanded. .
Beels gave this message in clear terms earlier this month to a cross-party committee of MPs, saying: “If anyone thinks we will raise standards simply by putting three budgets together… . . that is not the case.
“A radical change is needed in addressing the resources available to the fair work agency,” he added.