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Construction union UCATT have welcomed a call for action to tackle "disreputable" payroll companies.
The call for action was made by Labour MP John Cryer during a Westminster Hall debate on Wednesday 16th January.
Mr Cryer focussed his attention on payroll companies operating in the construction industry who encourage companies to reclassify employees as self-employed in order to avoid paying employer national insurance contributions of 13.8% and who then can avoid paying holiday pay, sick pay, redundancy and pension contributions.
He said: "That seems pretty disreputable to me, but what then happens, if the employer decides to go down the route of using a payroll company to transfer the work force into self-employment, is that the work force are asked to sign a contract with the payroll company. That is often sweetened slightly by a small rise in pay, but that will never compensate for all the other benefits and rights at work that in the meantime have been lost."
Mr Cryer, also described as "a perverse situation" the way in which construction workers after signing a self-employed contract with a payroll company don’t in theory have any formal relationship with their employer, while in reality that building firm still issues directions and engages with the workforce.”
During the debate Ian Murray MP Labour's Shadow Business Minister also called on the Government to launch an inquiry into bogus self-employment. He said: "It is incumbent on the Government to launch a full inquiry, through the Department for Business, Innovation and Skills, into this, not only for the sake of the employees and the Treasury, but because of issues in the construction sector such as blacklisting. People who work in the construction sector deserve an awful lot more from this Government."
Steve Murphy, General Secretary of UCATT, said: "This was a very important debate. It is vitally important that MPs and Ministers understand the murky affairs of the construction industry, which blight the lives of hundreds and thousands of construction workers."
(CD/GK)
