Why pledges to end ‘bogus self-employment’ could easily backfire 

Ending 'bogus self employment' is a good idea on the face of it. But is the reality that simple? 
08th February 2024
Written by Seb Maley

Is ending 'bogus self-employment' that simple?

As the countdown to the next general elections begins, the leading political parties are starting to drop hints and make promises about what they can deliver if voted into power.

Just last week, Angela Rayner, Deputy Leader of the Labour Party, pledged to bring an end to ‘bogus self-employment’ as part of a wider package of work and employment reforms.

This might sound like an innocuous statement. At face value, it’s the right thing to do; politicians wanting to stop ‘false self-employment’ and in turn, improve working conditions and rights? Makes sense. 

But in truth, Rayner’s comments should be met with caution. Self-employment is an increasingly diverse and widely misunderstood sector of the labour market. 

This is a big, complex issue – and it can’t be solved with soundbites alone.

What is ‘bogus self-employment’?

Let’s start at the top. What is ‘bogus self-employment’? And why might Labour – or any party – want to put a stop to it? 

Specifically, Labour wants to legislate for a single ‘worker’ status, rather than the patchwork of different employment and tax statuses that we currently have. In effect, this refers to those working self-employed who should be on the payroll and paying employment tax.

That sounds like an attempt to reduce non-compliance, right? An admirable ambition. So far, so good. 

Except, we’ve been here before, haven’t we? We don’t need to go too far back in time to see how policy changes introduced to ‘fix’ perceived problems in this sector have instead created problems.

IR35 reform casts a long shadow

And, of course, I’m referring to the off-payroll working rules. 

Their introduction, based on almost exactly the same reasoning – to stop contractors working as disguised employees – is an obvious example of where this sort of approach has gone wrong.

Rolled out to prevent perceived non-compliance, this deeply flawed legislation has ultimately created more problems than it has solved.

As many contractors will know, the off-payroll working rules have forced many genuinely self-employed workers onto the payroll and into zero-rights employment. 

It serves as a clear warning to politicians of all stripes that such policies, no matter how well-intentioned, can have unintended consequences.

Don’t let the gig economy boom cloud the picture

That’s not to say that there isn’t any room for improvement. 

The boom of gig working has exposed some flaws in the current system. High-profile and protracted legal cases have proven this, with Uber and Deliveroo, among others, demonstrating how complicated employment status can be. 

They have also highlighted that gig economy workers in particular are more vulnerable and could do with employment rights. To that end, policy adjustments are perhaps needed. 

Contractors face different challenges

At the other end of the spectrum, contractors – on higher day rates and providing professional services – face a different set of circumstances. Naturally, the challenges they face will be different from gig workers. 

These workers – just like many sole traders and other business owners – have chosen self-employment as a career. As a lifestyle choice, as much as anything, that offers independence free from the perceived trappings of employment. 

But the vast majority of contractors work, think and act as businesses. Yes, there are risks to doing so. Yes, there are challenges – but you don’t see many of them calling for more protection. 

If anything, experience tells me they want to be left to get on with running their business. 

A final thought…

Without careful consideration, attempts to protect the UK’s flexible workforce could well do long-term damage. 

Whichever political party is in power must take into account that a one-size-fits-all approach to policy won’t work – the UK’s self-employed workforce is a melting pot of freelancers, contractors, gig workers, small business owners and those with side hustles. 

However, Angela Rayner’s comments should – in my opinion – be the starting point for discussions around employment status. And frankly, it needs to be the starting point for political parties trying to win support from the self-employed ahead of a general election.

Because the independent workforce could well hold the key to winning the next general election. And many feel politically homeless. You only need to look at our latest annual survey for evidence – which shows that a huge 62.6% of contractors don’t believe any of the main parties represent their best interests. 

Clearly, there’s a gap to bridge. Politicians with leadership aspirations need to understand the interests and needs of all the self-employed – not just a small section of them – and deliver workable policies that reflect those priorities.
Seb Maley
Written by
Seb Maley
Our CEO, Seb Maley, has been with Qdos for over 20 years and is a leading commentator on IR35 and the contracting industry, featuring time and again in The Telegraph and Financial Times. The only thing he likes less than the unfair treatment of contractors is being forced in front of a camera to talk about it. Oh, and apparently moths?

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