Minimum wage ‘should be offered to self-employed people’

Posted 6th July 2017 in For Businesses For Workers

A prominent thinktank has called for minimum wage protection to be offered to certain self-employed people.

The Resolution Foundation has published a report, as part of its submission to the Taylor Review on modern employment practice, indicating that 49 per cent of the full-time self-employed workforce earn less than two-thirds of typical weekly earnings, meaning they can be classified as low-paid.

In real terms, this means these workers earn less than £310 a week. The fact that almost half of self-employed people fall below this threshold compares unfavourably to those in more conventional forms of employment, among whom only one in five are considered to be low-paid.

The introduction of the National Living Wage is set to reduce low pay among employees, but the self-employed will miss out under current plans. The Resolution Foundation suggested this could lead to wider problems, as companies may try to use self-employed contracts as a way to avoid paying the legal minimum wage.

Although the thinktank acknowledged that the minimum wage cannot simply be extended to cover all self-employment, it suggested that it be broadened to include any workers in a situation where the price of their labour is fixed by the company, rather than by themselves.

This would include gig economy-style platforms, or those with standard terms that they apply to a significant number of the self-employed.

Conor D’Arcy, policy analyst at the Resolution Foundation, added that more needs to be done in addition to this, explaining: “Stronger enforcement to clamp down on bogus self-employment is a prerequisite. But moving to narrow rights, benefits and tax gaps between the self-employed and employees would at last create a level playing field in the labour market.

“This would help to ensure that people’s employment status was based on the job that they do, rather than on a firm’s willingness to pay the minimum wage or the wish to avoid paying a fair share of tax.”

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