HR · 13 December 2017

Vulnerable self-employed urgently require better benefits, training and in-work protection

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Between nine and 13 per cent of the country’s self-employed population could be “vulnerable”

Urgent measures are needed to improve working conditions for the UK’s so-called “vulnerable” self-employed, such as better access to training, improved parental benefits and addressing issues to do with Universal Credit.

The measures have been laid out in a joint report published by the Independent Professionals and the Self Employed (IPSE) and Community, a trade union.

The report, entitled Under Pressure: Enabling the self-employed to break free, identifies three key indicators that demonstrate an individual is vulnerable self-employed: low earnings, a lack of autonomy at work and a lack of financial security.

Any self-employed worker facing two of these indicators could be considered vulnerable, the report finds. Between nine and 13 per cent of the country’s self-employed population are believed to be at risk of being vulnerable.

Revealed: The UK’s top five cities to be self-employed

Welcoming the report, the IPSE’s director of policy, Simon McVicker, said: “Self-employment is insecure by its very nature. But not every self-employed person needs additional support.”

The IPSE and Community have made the following six recommendations to reduce the risks for the vulnerable the self-employed workforce.

(1) Improve access to training as a route out of low pay

The report recommends that government make training for new skills tax-deductible for the self-employed, thereby making upskilling more attractive and viable for those on lower pay. The government should also explore introducing robust criteria for certifying online training courses for the private sector.

(2) Ensure Universal Credit works for the self-employed

Extending the one-year minimum income floor (MIF) period to two-years would open Universal Credit out to a much larger proportion of the low earning self-employed, the report finds. It recommends the MIF should be calculated on a quarterly or annual basis to properly account for the fluctuating incomes of the self-employed.

(3) Create a self-employed benefits package

Vulnerable self-employed don’t have access to full maternity pay, paternity pay and paid parental leave. The report urges government to introduce a parental benefits package that works for vulnerable self-employed workers, providing them with a safety net to help them protect and grow their businesses.

(4) Strengthen protection against late payments and unpaid work

The report states that the Small Business Commissioner must have real power to hold late and non-paying companies to account. Guaranteeing payment terms and the right to a written contract for the vulnerable self-employed would also be positive steps.

(5) Introduce a statutory definition of self-employment

A statutory definition would reduce the risk of false self-employment and make it harder for businesses to force people into self-employment. The report claims that not only would this give falsely self-employed people back their rights, it would also give the legitimately self-employed greater control in work.

(6) Incentivise ways to bring self-employed people together 

Vulnerable self-employed workers should be encouraged to come together to promote change and improve the lives of the most vulnerable among them. The report supports the creation of more co-operatives, trade unions, membership and mutual assistance groups.

Commenting on the report’s recommendations, general secretary at Community, Roy Rickhuss, said: “The self-employed sector will soon be bigger than the public sector. Trade unions must face up to the huge challenge of organising these workers and providing support that is relevant to their working lives.

“The report sets out some of the problems self-employed workers face. Crucially, the government is failing to support a group of people who offer so much to the British economy.”

McVicker added: “Upskilling is the best route towards higher pay for the self-employed. The government announced it will look at training for employees and the self-employed at the Budget.

“We will respond to the consultation and make the point that the government needs to make training for new skills tax-deductible for the self-employed – something only employees are able to access at the moment.”

Read more: HMRC urged to give self-employed full tax breaks for learning new skills

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ABOUT THE EXPERT

Fred Heritage was previously deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London.

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