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Self-Employment Under Labour

Umbrella companies banished under Labour

The Labour Party manifesto has identified umbrella companies as a blight on employment taxation and limiting workers’ rights and has pledged to ban them should it be voted into power on 8th June.

Whilst Labour acknowledge that self-employment is a vital and entrepreneurial sector of the UK economy, its plans for re-shaping its makeup are geared towards workers’ rights. The party say that there is mounting evidence that workers are being forced into self-employment by unscrupulous employers to avoid costs and their duties to workers. They therefore intend to clamp down on bogus self-employment by:

  • Shifting the burden of proof, so that the law assumes a worker is an employee unless the employer can prove otherwise.
  • Imposing punitive fines on employers not meeting their responsibilities and thereby acting as a deterrent to others.
  • Involving trade unions in enforcement, e.g by giving them an executive board of a new Ministry of Labour.
  • Banning umbrella companies that Labour say create a false structure to limit employers’ tax liabilities and limit workers’ rights.
  • Giving employment agencies and end-users joint responsibility for ensuring that the rights of agency workers are enforced.
  • Rolling out sectoral collective bargaining and strengthening trade union rights so as to empower individuals to claim their own rights in the workplace.
  • Extend the rights of employees to all workers, including shared parental pay.

Recognising that the law often struggles with the ever-changing new forms of employment and work, Labour would establish a dedicated commission to modernise the law around employment status. The commission would be led by legal and academic experts with representation from industry and trade unions.

New statutory definitions of employment status would also reduce the need for litigation and improve compliance.

The Tories also want to ensure that those working in the ‘gig’ economy are properly protected but intend to wait until the publication of the Taylor report until they decide on a course of focused action.

The Taylor Report will also influence Liberal Democrat modernisation of employment rights to make them fit for the ‘gig’ economy.

By Andy Vessey

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3 thoughts on “Self-Employment Under Labour”

  1. GE

    Not all THAT bad tbh, could have been much worse and some of those umbrella co’s seriously gouge a % from the person earning the dosh.

    Now if they also said they’d revert the IR35 changes….

  2. Mick

    What a load of crap! So this is what will happen they ban umbrella corporations thousands of people find them self unemployed. If they find employment their earnings drop by well over a half to what permanent workers are on! This goverment and labour are in denial, I work for my self though my own company and I earn 3 time what I earn as a permanent employee! I don’t want all the completely rubbish perks of employment paid holiday pension etc. Cause I can decide when I want to work I can decide where I want to put my money! I also pay more tax in corp tax, VAT, and personal tax than I ever have, so the system benifits from this! The trouble is the goverment are you pay less tax on the amount you earn than if you earn the same as PAYE, plus the obvious NI contribustions employee and employer. Thing is if they force you in to the IR35 or permanent employment (basically PAYE) you don’t get paid what you do as a contractor your pay falls to a third of what it was you pay no corp tax no vat and they end up with a fraction of the money they did when you where working through your own company or umbrella! So they won’t get more money by forcing people in to permanent employment! They will loose billions! You end up poorer and can’t afford anything you spend less this the economy also takes a hit!

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