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The UK government must act to stop bogus self-employment if its flagship review of workers’ rights is to succeed, an official tasked with tackling labor exploitation has warned.
Margaret Beels, independent director of labor market enforcement, said this in an interview with the Financial Times employers could simply avoid new obligations to 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 needs to make decisions,” said Beels, echoing the concerns initiated by trade unions and business groups on the omission of a critical set of measures from the draft law on rights in the employment relationship.
The bill, introduced to parliament last year, includes a comprehensive set of reforms to give UK workers greater security. But it doesn’t solve a problem that Labor has previously promised to tackle: the ability for employers to exploit ambiguities in UK worker status laws.
Instead, the government said it would have to consult at length on how to create a simpler framework, with a single status for workers and a clear distinction between employed and self-employed.
Beels said there was a risk that leaving the issue for later would allow employers to avoid their new responsibilities by hiring gig workers.
The UK is unusual in that it has three types of employment status: employees, self-employed and an intermediate category of ‘limb (b)’ workers, and it is often difficult to determine how people should be treated.
Workers in the third group have more protection than the self-employed, but lack some important employee rights that the Labor government plans to strengthen through the ERB, such as statutory sick pay, redundancy rights and protection against unfair dismissal.
Crucially, they are treated as self-employed for tax purposes, creating a huge incentive for businesses to use contractors instead of employees, especially following the £25bn budget increase in Employers’ National Insurance.
But the rise in bogus self-employment is just one of the risks Beels sees as looming, as the government enshrines new rights in law without yet specifying how much money will be available to implement them.
The complexity of employment practices in the UK, where workers can be hired by one agency, hired by another, and told what to do, makes it difficult for individuals to exercise their rights, she said.
But Britain’s resource-strapped enforcement agencies 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 Standards Inspectorate — are planning to merge into the new Agency for Fair Workwith a wider scope.
Beels’ role was created by the previous Conservative government to improve coordination between the agencies, set their strategy and prepare for this merger.
This proved to be a frustrating task, she admitted, as ministers repeatedly failed to fulfill their commitment to create a single body.
“I have described myself as a kind of John the Baptist, saying prepare the way, this great thing is coming . . . and he never turned up,” said Beels, a former chairman of the GLAA and a former director of Scottish Gas.
The Fair Work Agency is now taking shape under Labor and Beels, whose own office will be disbanded when the agency is established, is intent on making it a success.
Boosting his profile will be key. “Transparency is very important. . . workers who know what the agency does and how effective it is,” she said.
Even without new funding, the creation of a single executive body would allow for a more efficient allocation of resources, she insisted.
Funding for all three agencies was just over £40m in 2023-2024. — of which £31.2 million was for HMRC’s minimum wage team. Resources for FWA will be determined in a close spending review this summer.
Existing restrictions meant the GLAA and EAS did not have the capacity to “pick up the stones” and investigate the extent of exploitation in the construction sector, which has been flagged as high-risk, she said, hinting that resources will come under further pressure as the agency’s remit expands.
Beels gave this clear message to a cross-party committee of MPs earlier this month, saying: “If anyone thinks we’re going to raise standards simply by putting three budgets together . . . that is not the case.”
“There needs to be a big change in how we deal with the resources available to the Fair Work Agency,” she added.
