Bringing down the umbrellas! Clamping down on bogus self-employment in Wales

Imagine finding yourself in a position where despite working for a single company in practice you’re made to pay both employee and employer national insurance contributions? Then to add insult to injury, miss out on employment rights such as holiday pay, sick pay and pensions?

Bogus self-employment is a major problem in the construction industry, where employment agencies have turned to the use of so called umbrella payroll companies to avoid paying national insurance contributions and adhering to the nationally agreed terms and conditions within the construction sector. Employment agencies benefit from these arrangements by saving the cost of employers’ national insurance whilst workers on some of the UK’s biggest construction projects are left seriously worst off.

Unions have long been campaigning across the UK for action on these exploitative practices that leave workers out of pocket and this week witnesses Wales leading the way as the Welsh Labour Government has announced moves to ensure fair employment practices on publicly funded construction projects in Wales.

The Welsh Government is issuing new procurement guidance to the public sector in Wales on ensuring fair treatment in terms of pay and employment rights through procurement in publicly funded construction and infrastructure projects in Wales.

The guidance will go out to public bodies and organisation across Wales, outlining how to address good employment practice through procurement and what employment best practice should look like – to “adopt fair employment and labour practices, recruiting and retaining staff in a fair and ethically manner” and “provide a safe and competent workforce employed in accordance with best practice”.

The three major trade unions in construction in Wales – Unite, UCATT and the GMB – raised concerns with the Welsh Government following a dramatic rise in the use of umbrella companies since the UK government passed legislation in April 2014 aimed at cracking down on false self-employment but resulted in employment agencies getting round the new legislation through turning to umbrella companies.

The new guidance comes on the back of the trade unions working with the government to see what scope existed to tackle the problem through the distinctively Welsh approach to progressive and ethical procurement and the result is testament to the real commitment to social partnership in Wales from the Welsh Labour Government.

Through working together on key issues as a labour movement we’ve seen wins for workers in a number of areas – protecting agricultural workers by retaining an AWB type body, supporting Remploy workers sacked by the callous coalition government with the Employer Support Grant to help get them back into work and action on blacklisting taken, once again, through public procurement.

If people want to know what difference Labour can make in government then you need look no further than what is being done in Wales – it goes to show what you can do when you have a government and ministers with the political will to tackle unfair employment practices, to stand up for workers and that are committed to working with trade unions.

The Welsh Government’s move to clamp down on bogus self-employment is a step in the right direction and the unions will continue to work in partnership to ensure the effective implementation of the advice. For far too long workers in construction have been exploited by unethical employment practices – government’s across the UK need to take heed and take action too.