ESPN Thematic Report on Access to social protection of people working as self-employed or on non-standard contracts - United Kingdom

The effect of employment law is that an employee is defined as someone employed under a contract of service. A ‘worker’ (e.g. someone doing casual work for a business) is employed but has fewer rights than an employee. You are self-employed if you are employed under a contract for services, which you supply to someone else.

There is no agreed definition of non-standard work in the UK. However, it may be seen as comprising part-time work, fixed-term (temporary) work, work as a temporary agency worker, casual and seasonal work, zero hours/on call contracts, annualised hours, term-time working, job sharing, 9-day fortnight/4.5 day weeks, flexitime, and potentially other categories of worker (e.g.) apprentices and trainees), as well as crowd workers, mobile app workers etc. Part-time work is often permanent and secure.

Self-employment has been growing since 2009 and most of the growth has been part time and the age profile has grown older.

Low pay is more common among self-employed people and the self-employed have formed a growing proportion of the population in poverty.

There has been a growing concern with bogus self-employment and the trades unions have been successful recently in challenging it in employment tribunals.

In fact there is generally increasing concern about the rights of self-employed and non-standard workers. The Government appointed the Taylor Commission in 2016 to review workers’ rights and practices and the Work and Pensions Select Committee is now setting up an inquiry into self-employment and the gig economy, with a particular focus on whether the UK welfare system adequately supports these workers.

The self-employed can contribute to National Insurance (NI) and receive all such benefits except unemployment benefit (Jobseeker’s Allowance) if their income is above the NI threshold; but low-earning self-employed (and employed) workers do not.

The fact that much of the UK social security system is means tested, and that the means-tested benefits are similar to the contributory benefits in some ways, could be seen as meaning that low income self-employed people are protected. But this takes no account of take-up, joint assessment or other problems of means testing.

Universal Credit (UC) is replacing existing means-tested working age benefits (since 2013) and has a new earnings floor that will assume that the self-employed are working 35 hours per week for the national living wage. This may lead to a reduction in in-work transfers that the self-employed have been entitled to in the past.

Self-employment and non-standard work have some advantages. Most of the self-employed seem to be content with the freedom and flexibility, particularly older and female workers, and few part-timers want to work full time. There may be more of a problem for younger male workers. And temporary agency workers often have low pay and inadequate incomes.

In our view, the current social protection system is not well suited to such workers and should be rethought with them in mind. Conditions were tightened recently and could be relaxed. Provision for the self-employed should be reviewed, in particular in relation to the current proposals for access to maternity protection.

In the meantime, the national living wage clearly needs to be enforced and ‘gig’ employers should be prevented from avoiding their obligations as employers.

The impact of the UC minimum income floor for the self-employed, as well as in-work conditionality, needs to be carefully monitored.