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The UK government must act to end fake self-employment if its flagship overhaul of workers’ rights is to succeed, the official tasked with tackling workplace exploitation has warned.
Margaret Beels, independent director of labor market enforcement, told the Financial Times in an interview that employers They could simply circumvent the new obligations imposed on their staff if ministers continue to delay the adoption of legislation to clarify the status of workers.
“I would like to see a little more urgency. . . You can consult until the cows come home, but sometimes the government just has to make decisions,” Beels said, echoing the concerns raised by unions and business groups over the omission of a critical package of measures from the labor rights bill.
The bill, introduced to Parliament last year, encompasses a wide-ranging package of reforms aimed at giving British workers more security. But it does not tackle a problem that Labor promised to solve: the ability for employers to exploit ambiguities in UK workers’ rights law.
Instead, the government said it would need to carry out extensive consultations on how to create a simpler framework, with a single worker status and a clear distinction between employees and the self-employed.
Beels said there was a risk that leaving this issue until later would allow employers to shirk their new responsibilities by hiring gig workers.
The UK is unusual in having three types of employment status: employees, self-employed and an intermediate category of ‘member (b)’ workers, and it is often difficult to establish how people should be processed.
Workers in the third group enjoy more protection than the self-employed, but they do not have some important rights that the Labor government plans to strengthen through the ERB, such as statutory sick pay, rights in dismissal matters and protection against unfair dismissals.
Crucially, they are treated as self-employed for tax purposes, providing a strong incentive for businesses to use contractors instead of employees, particularly after the £25bn insurance budget increase national employers.
But the increase in false self-employment is only one of the risks that Beels sees looming, while the government is writing new rights into law without yet specifying how much money will be made available to enforce them.
The complexity of employment practices in the UK, where workers could be recruited by one agency, employed by another and told what to do by someone else, made it difficult for individuals to assert their rights, she declared.
But British agencies, with limited resources, are struggling to enforce existing labor market rules. The three main bodies — HM Revenue & Customs’ minimum wage enforcement team, the Gangmasters and Labor Abuse Authority and the Employment Agency Standards Inspectorate — should be merged into a new Fair Work Agencywith a broader mandate.
Beels’ role was created by the previous Conservative government to improve coordination between agencies, define their strategy and prepare for this merger.
It had proved a frustrating task, she acknowledged, as ministers failed to follow through on their commitment to create a single body.
“I described myself as a sort of John the Baptist character, saying: prepare the way, this great thing is coming. . . and that never happened,” said Beels, former chairman of the GLAA and former director of Scottish Gas.
The Fair Work Agency is taking shape under Labour, and Beels, whose own office will be disbanded when the agency is created, intends to make it a success.
Strengthening its notoriety will be crucial. “Transparency is really important. . . workers know what the agency does and how effective it is,” she said.
Even without new funding, the creation of a single monitoring body would make it possible to allocate resources more efficiently, she insisted.
Funding for the three agencies totaled just over £40 million in 2023-24, of which £31.2 million was for HMRC’s minimum wage team. Resources for the FWA will be determined during this summer’s tight spending review.
Existing constraints meant that the GLAA and EAS did not have the capacity to “lift the stones” and investigate the scale of exploitation in the construction sector, reported as high risk, a- she explained, suggesting that resources would be strained as the agency’s remit expanded. .
Beels gave this message in no uncertain terms earlier this month to a cross-party committee of MPs, saying: “If anyone thinks we will raise standards just by launching three budgets together…. . . this is not the case.
“There needs to be a step change in the management of the resources available to the Fair Work Agency,” she added.