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The umbrella that offers no shelter to construction workers forced into bogus self-employment

David Jackson | 12th February 2016

A recent article in the Guardian about false self-employment and financial exploitation of construction workers at the hands of an ‘umbrella’ companies caught my attention.  Not least because I agreed with many of the journalist’s descriptions of exploitation, including:

  • Denial of employment rights
  • Deprived of auto-enrolment pension entitlements
  • Tax dodging
  • Downward manipulation of employers National Insurance contributions
  • The imposition of employer and employee deductions from the worker
  • Fee deductions coming from the workers’ pay

The article also contained a quote from construction union UCATT, whose view I wholeheartedly endorse. “Many construction workers move from job to job and agency to agency every few months,” UCATT says.  “Because they will be paid via an umbrella company for a period of less than three months before they move on to another agency and another umbrella company, they risk remaining in a pensions limbo and never being enrolled on auto-enrolment.”

To underline the points made above, an employment tribunal found recently in an applicant’s favour that he’d had unlawful deductions made, awarding £3,993 in compensation. 

Meanwhile, the Government has signalled it intention to clamp down on the tax loss ‘created’ by umbrella companies, with new legislation due to appear in this year’s budget.  High time, too, since this same sort of abuse was examined by the last Labour government seven years ago.

You can read the full Guardian article here.

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