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date: 2 May 2008

embargo: 00:01hrs Wednesday 7 May 2008

Call to end bogus self-employment in construction

The TUC's Commission on Vulnerable Employment, whose report is published today (Wednesday), calls for reform of the Construction Industry Scheme (CIS) as one of its recommendations. Recommendation 51 says:

'The Construction Industry Scheme (CIS) should be reformed to ensure that CIS workers are considered as employees.'

The report says that one of the main causes of vulnerable work is the poor deal suffered by those who work but do not have the legal status of an employee, with a proper contract of employment. It singles out the CIS as one example of this, saying:

'The vast majority of workers on CIS have the characteristics of employees, as they have set hours, cannot refuse work, have to obey orders and have materials and tools provided. However, many of these workers are classified as self-employed. Unlike other employees, this group of bogus self-employed workers are taxed 20 per cent at source (30 per cent before registration occurs); however, they can claim much of the tax back through making an end-of-year tax return. The employer pays no NI contributions and the worker pays at a lower level. Due to their self-employed status, CIS workers have very few statutory employment rights and are denied access to additional workplace benefits.'

The Commission, which involves employers and independent experts, as well as trade unionists has been working for the last year. It says that two million UK workers are 'trapped in a continual round of low-paid and insecure work where mistreatment is the norm.'

In the introduction commissioners say that they were shocked both by the extent of vulnerable work and that much of the poor treatment they found was perfectly legal. The report says that 'employment practices attacked as exploitative in the 19th century are still common today' and that the 'poor treatment at work that we have found should not be tolerated.'

TUC General Secretary and Commission Chair Brendan Barber said: 'All the Commissioners - whatever their backgrounds - were shocked at just how vulnerable some workers are in today's Britain. Their treatment is a national scandal, and we need urgent action. The abuse of employment status, such as we see in the Construction Industry Scheme, is a root cause of much of the exploitation that disfigures UK workplaces.'

Alan Ritchie, General Secretary, UCATT, who is also a member of the Commission, said: 'For too long the UK had turned a blind eye to the problem of bogus-self employment, where workers without genuine autonomy in the workplace are denied access to the most basic of employment rights. For these hard working people holiday pay, sick pay, or even the minimum wage are only fantasies. We heard from workers like Jamal, who is paid £3.10 an hour on a building site, and Robert, who has spent the last 15 years working for £17.50 a day cleaning cars. These workers aren't self-employed, but the complexity of UK employment law continues to allow them to be exploited by rogue employers.'

Testimonies from workers in the construction industry informed the Commission's work:

• Jamal is a 32-year-old black African migrant worker. He has worked in construction for six months and is paid £4.10 an hour as a casual construction worker. He does not receive any holiday pay, sick pay or other benefits. He gets this rate because he has carpentry skills. Other casuals are paid only £3.10 per hour. Jamal works an eight-hour day with a half-hour break, though managers sometimes do not allow workers to take their breaks for reasons including there being too much work, time restrictions caused by threatening weather conditions, or because the site is receiving a visit from the company manager. Jamal says that he and his co-workers are treated badly. Managers '...shout at you, so sometimes it is crazy. If it [your work] doesn't satisfy them... some bosses they are even more worse. They abuse you very bad.'Jamal and his co-workers are also pushed to work in dangerous conditions without any protective equipment and without training on health and safety. Although Jamal has never been injured, he has felt the effects of dust inhalation and knows many workers who have been hurt. Undocumented workers fare the worst of all: 'A lot of people who are not allowed to work and have to survive to pay the rent. People are working for £3 an hour. Also you have to work 12 hours.'

Others recommendations that would affect the construction industry include:

• Abolition of the workers' registration scheme for A8 nationals.
• Unless a strong economic case can be made for their retention, restrictions on the labour market participation of workers from Bulgaria and Romania should be lifted.
• A clear, nationally agreed set of standards should be established for employment businesses/agencies providing temporary labour, which needs to be closely monitored. The Government should be prepared to extend the GLA licensing regime - a proposal which responsible agencies back - to cover sectors characterised by vulnerable employment. The aim would be to ensure that an employer seriously exploiting workers and undercutting reputable companies would lose their licence to trade.

A release providing further details of the Commission and its full recommendations is also available.

NOTES TO EDITORS:

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Contacts:

Media enquiries:
Liz Chinchen T: 020 7467 1248 M: 07778 158175 E: media@tuc.org.uk
Rob Holdsworth T: 020 7467 1372 M: 07717 531150 E: rholdsworth@tuc.org.uk
Elly Brenchley T: 020 7467 1337 M: 07900 910624 E: ebrenchley@tuc.org.uk

Press release (1,000 words) issued 7 May 2008