Ministers order HMRC crackdown on ‘gig economy’ firms

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Ministers have ordered a crackdown on companies that use large numbers of self-employed or agency workers.

The financial secretary to the Treasury, Jane Ellison, announced that HM Revenue and Customs was launching a new unit to investigate companies who opt out of giving workers employment protections by using agency staff or calling them self-employed.

The decision comes to light following an investigation by the Guardian into low pay at delivery company Hermes, and further investigations into the working rights of employees at Taxi-app company Uber and agency workers at Sports Direct warehouse in Derbyshire.

Ellison described the plans in a letter to Labour MP Frank Field, who recently wrote to Theresa May asking her to examine claims of false self-employment by couriers for the delivery company Hermes following the Guardian investigation.

The new HMRC unit will tackle misuse by companies of agency workers to avoid tax and other employment obligations.

It is understood that the new HMRC unit – called the employment status and intermediaries team – will investigate companies that declare they use significant numbers of self-employed workers and will also act on intelligence and complaints about alleged abuses of the rules around self-employment.

The verdict and a shifting HMRC approach to the way companies use labour could have widespread ramifications for the so called “gig economy”.

Edward Troup, executive chairman of HMRC, said on Thursday that complaints of false self-employment by Hermes couriers, including several who said they were paid below the minimum wage, had been passed to HMRC compliance teams for detailed consideration.

“Employment status in the UK is determined by the reality of the working relationship, not simply by the terms of any contract,” Ellison added. “Individuals cannot be opted out of employment rights and protections simply by an engager calling them ‘self-employed’.”

The move was also welcomed by the general secretary of the Trades Union Congress, Frances O’Grady.

“This investigation should be a warning shot to bad employers,” she said. “Those who force staff into bogus self-employment must be held accountable.”

Lawyers said that the HMRC’s increased focus on the rights of low-paid self-employed and agency workers, and the impending Uber employment tribunal verdict would put many firms on alert.

 

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