The Freelancer and Contractor Services Association (FCSA) has rejected a report from the Citizen’s Advice Bureau (CAB) which claims around 460,000 people have bogus self-employed status nationwide.
The FCSA said the report is an over-simplification of the real situation, and that the report did not make clear that bogus self-employment is disproportionately found among lower-paid workers. The nationwide figure given by the CAB does not appear to factor in this disparity.
FCSA data indicates 48% of self-employed workers are higher-paid professionals, such as managers, directors and senior officials. The CAB report surveyed 500 of its clients who may or may not be representative of the workforce as a whole.
Julia Kermode, chief executive of the FCSA, commented: “Whilst it is positive that the Citizen’s Advice Bureau is exposing some very poor practices, we are concerned that today’s report may lead to pressure for a knee-jerk response to what is actually a very complex issue.”
The CAB report claims that many people are told they are self-employed when government tests would indicate otherwise. Employment status can be a grey area, as HMRC and the DWP use different tests to determine status.
The CAB claims that bogus self-employment status costs the Exchequer £314m annually and that lower-paid workers potentially lose out on £1,288 annual holiday pay and pay £61 extra in National Insurance contributions. The CAB is calling for a review of the applicable rules to increase clarity.
Julia Kermode of the FCSA said: “We strongly oppose any bad practice and we will continue in our efforts to help rid the industry of any rogue firms.”