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The UK government needs to act to stop false self-employment if it wants its major reform of workers' rights to succeed, the official charged with tackling worker exploitation has warned.
Margaret Bales, Independent Director of Labor Market Enforcement, told the Financial Times in an interview: Employers It could simply avoid new obligations to its employees if ministers continue to delay legislation aimed at clarifying the situation of workers.
“I would like to see a little more urgency… You can consult until the cows come home, but sometimes the government just needs to make the decisions,” Bales said. Echoing fears It was raised by unions and business groups over the omission of an important set of measures from the Employment Rights Bill.
The bill, which was introduced to Parliament last year, includes a comprehensive set of reforms to give UK workers greater security. But it does not address an issue that Labor had previously promised to address: the potential for employers to exploit ambiguities in UK law regarding the status of workers.
Instead, the government said it would need to consult at length on how to create a simpler framework, with uniform worker status and a clear distinction between employed and self-employed.
There is a risk that leaving this issue until later will allow employers to evade their new responsibilities by hiring temporary workers, Bales said.
The UK is unusual in having three types of employment status: employed, self-employed, and an intermediate category of “Party B” workers, and it is often difficult to determine how people should be treated.
Workers in the third group enjoy greater protection than the self-employed, but lack some important employee rights that the Labor government plans to strengthen through the European Employment Council, such as statutory sick pay, redundancy rights, and protection against unfair dismissal.
Importantly, they are treated as self-employed for tax purposes, creating a huge incentive for businesses to use contractors rather than employees, especially after the budget's £25 billion increase in employers' National Insurance.
But the rise in pseudo-self-employment is just one of the risks that Bales sees looming, as the government enshrines new rights into law without specifying how much money will be available to enforce them.
She said the complexity of UK employment practices, where workers could be hired by one agency, employed by another, and told what to do by someone else, made it difficult for individuals to enforce their rights.
But UK enforcement agencies with limited resources struggle to enforce existing labor market rules. The three main bodies – HMRC's Minimum Wage Enforcement Team, the Gang Leaders and Work Abuse Panel and the Employment Agency Standards Inspectorate – are to be merged into New Fair Work Agencywith broader validity.
The role of Bills was created by the previous Conservative government to improve coordination between agencies, develop their strategy and prepare for this merger.
She admitted it had been a frustrating task, with ministers repeatedly failing to follow through on the commitment to create a single body.
“I described myself as a John the Baptist figure, saying prepare the way, this great thing is coming… it never came,” said Bales, a former president of GLAA and a former director of Scottish Gas.
The Fair Work Agency is now taking shape under Labour's leadership, and Bales, whose own office will be dissolved when the agency is created, intends to make it a success.
Boosting her profile will be crucial. “Transparency is really important… so workers know what the agency is doing and how effective it is,” she said.
She stressed that even without new funding, the establishment of a single enforcement body would make it possible to allocate resources more effectively.
Total funding for the three agencies was just over £40 million in 2023-24 – of which £31.2 million was for HMRC's minimum wage team. The resources needed for the FWA will be identified in a narrow spending review this summer.
She said current restrictions meant GLAA and EAS did not have the capacity to “pick up the rocks” and investigate the extent of exploitation in the construction sector, which has been classified as high risk, hinting that resources would come under new pressures as the agency's remit expands. .
Bales put that message in clear terms earlier this month to a cross-party committee of parliamentarians, saying: “If anyone thinks we will raise standards simply by putting three budgets together… that is not the case.
“There needs to be a step change in the treatment of resources available to the Fair Work Agency,” she added.
