Hiding behind ‘self-employed’ shield

Exploitative companies that use large numbers of agency or self-employed staff to avoid employment protections and taxes will be targeted by a new HM Revenue and Customs (HMRC) unit.

The crackdown was ordered by ministers after a number of large employers, including retailer Sports Direct and delivery company Hermes, were brought to the public’s attention for not employing their staff directly.

Unite welcomed the move but said ending unfair working conditions was an issue that needed tackling with legislation.

Financial secretary to the Treasury, Jane Ellison, announced that the HMRC was creating a specialist investigative unit to target companies that deprive workers of employment protections by declaring staff self-employed or using agencies.

Ellison said, “(The government is) committed to taking strong action where companies, to reduce their costs, force their staff down routes which deny them the employment rights and benefits they are entitled to.”

The plans were laid out in a letter to Labour MP Frank Field, after he wrote to the prime minister asking her to look into claims, made following an investigation by the Guardian, that Hermes was falsely designating its couriers as self-employed, with some earning less than the minimum wage.

The announcement came as Uber taxi drivers wait for the verdict of a tribunal which will decide if they are self-employed or should be classed as workers who are entitled to the minimum wage, paid holidays, sick pay and other employment rights.

The new “employment status and intermediaries” unit will also target companies who use agency staff to dodge employment rules. The launch comes after thousands of agency workers at the Sports Direct warehouse in Derbyshire, which was the focus of a Unite campaign against “Victorian” working conditions, were told they will receive around £1m in pay arrears after it was revealed that they had not been receiving the minimum wage.

Unite assistant general secretary, Steve Turner, said that while the new unit was a step in the right direction, attacks on working rights through zero-hour contracts, false self-employment and agency work can only be halted through legislation.

“The race to bottom on our pay and working conditions has been accelerating in recent years as companies have found more and more ways to take advantage of loopholes in our employment rights.

While the unit sends a warning to employers intent on denying workers their legal rights, it will not fix the larger issue of insecure and exploitative work,” Tuner said.

“For that to happen we need to close the legislative loopholes that allowed these methods to emerge in the first place, as well as strengthening trade union rights and creating decent jobs through an economic policy based on investment rather than cuts.”