“Umbrella” companies need to be regulated

“Umbrella” companies need to be regulated

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The tax changes that took effect last month mean that thousands of gig economy workers in the UK are now employed by unregulated “umbrella companies.” The contractors hired by these companies engage in temporary contracts and avoid large companies from exempting the cost of hiring long-term employees. The problem is that they are accused of weakening the rights of workers.

The so-called first umbrella came out in 2000 IR35 tax regulations When workers provide services through their own limited liability companies or other intermediaries, this approach is introduced to discourage “non-pay work”. Since the April reforms, this extra layer in the supply chain has protected employers who hire contractors from the “disguised employment” laws by taxing workers at the source. However, although workers are taxed like employees, they are deprived of the benefits of a permanent contract-if they want to work, they have no choice but to sign a contract.

As a bigger employer adhere to According to data from the Employment Status Forum, the tax reform organization, temporary workers are hired through third-party agencies. It is estimated that an estimated 600,000 umbrella workers in the UK have been deprived of billions of pounds in benefits.

in a Report this weekIt is estimated that 2.5 billion pounds of holiday wages are withheld by temporary workers each year; on the one hand, because they do not know their entitlements, on the other hand, because some parasols actually prevent them from booking vacation time. If unclaimed, this can be legally kept under the umbrella, and if HM Revenue & Customs appears in the worker’s salary package, it is estimated that it will reduce tax revenue by 1 billion pounds.

Umbrella workers often complain that their take-home wages are lower than expected and the “employment costs” are not transparent Regular deduction From the payroll.Campaign activists often mention errors in tax and national insurance calculations, deliberately claiming some unethical umbrella companies “Skim” salary With false accusations. They also questioned the comfortable relationship between the recruitment agency and the head office, demanding increased transparency in commission payments and the list of “preferred suppliers”.

The temporary nature of this kind of work means that umbrella workers (many of whom earn only a little bit higher than the minimum wage) risk being thrown away by complaints. But they do not have an independent agency to appeal or seek support; their only remedy is the employment court.

The union claims whether the umbrellas should be completely closed They use Some of Britain’s most vulnerable workers.The Conservative Party in its 2019 manifesto Pledge Establish a single enforcement agency for the employment law to strengthen oversight of the department-a promise it should now fulfill. Activists say that if there is no mechanism for workers to whistle and not lose their livelihoods, it will be meaningless. They hope that regulators “name and humiliate” employers “with shame to cover up workers’ interests” to encourage greater responsibility in the supply chain.

Broadly speaking, employment and tax laws do not apply to millions of British odd jobs.This Pension Supervisory Agency This week it warned gig economy organizations that “recognize that the people who work for them are workers and should be eligible for pensions.” Decision makers should urgently review the unintended consequences of IR35 changes. Unethical umbrella companies cast a cloud on the flexible labor market. More effective supervision is essential to avoid flexibility being incorporated into development.

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