HR · 6 July 2017

Government urged to protect freelancers with self-employed minimum wage

The study predicted as many as half of self-employed workers were earning below the minimum wage
The study predicted as many as half of self-employed workers were earning below the minimum wage

Policy makers should introduce a self-employed minimum wage to tackle low pay and insecure working practices, according to a new report recommending significant changes to the rights of Britain’s contractors and freelancers.

Contributing to the upcoming gig economy review, authored by Royal Society of the Arts chief Matthew Taylor to provide government with a roadmap for addressing the challenges of modern self-employment, the Resolution Foundation said an extension of existing laws would protect self-employed workers who do not set their own pay and fall beneath the minimum wage threshold.

New analysis from the think tank suggested 49 per cent of Britain’s self-employed workforce were earning below £310 per week – less than two-thirds of typical weekly earnings. This contrasted with the fifth of regular employees in the same bracket.

Since April 2017, Britain’s minimum wage has been £7.50 for workers over 25 years old, with reduced rates for lower age brackets and apprentices.

The failure of the National Living Wage (NLW) to reach self-employed workers was cited as a key concern, and calls for a self-employed minimum wage were clarified by the Resolution Foundation with two tests.

Firstly, “gig” workers employed by on-demand platforms would see their status shifted to reflect regular employment, thus qualifying for the minimum wage.

Meanwhile, the work of more traditionally self-employed people would be assessed alongside “average” working paces to see whether they are earning beneath the legal minimum wage.

The study highlighted Britain’s 150,000 freelance hairdressers and 80,000 cleaners as among those who could benefit from a self-employed minimum wage.

Commenting on the proposals, Conor D’Arcy, a Resolution Foundation policy analyst, praised Britain’s high level of job creation in recent years, but warned certain sectors fostered “very low pay and precious little security”.

“This is especially true of the growing army of the self-employed. While many are higher earners who benefit from significant flexibility, around half fall below the low pay earnings threshold of just £310 a week,” he added.

“The government can start by extending minimum wage protections to those self-employed people whose prices are set by a firm. This would mean that self-employed people in the gig economy would be given protection against extreme low pay for the first time ever.”

Further recommendations made by the Resolution Foundation to the Taylor review included an extension of Jobseekers’ Allowance for those who have paid Class 4 NICs for the past two years, and asking firms that take on self-employed contractors to pay employer NICs.

D’Arcy claimed such protections would create a “level playing field” in the labour market and bring the benefits of regular employment to Britain’s freelancers and contractors.

Read our insider’s damning account of working for Deliveroo

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ABOUT THE EXPERT

Simon Caldwell is a reporter for Business Advice. He has a BA in politics and communications from the University of Liverpool, and previously worked as a content editor in the ecommerce industry.

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