A HUGE INCREASE in bogus construction self-employment working under the Construction Industry Scheme (CIS) has been revealed by Unite, the construction industry union.
A Freedom of Information (FoI) request by the union, revealed that 1,206 construction workers were paid via the CIS during 2022/23. This was a 15% increase on the figure for 2021/21 when 1,047 workers were paid via the scheme – itself a 7.5% increase on the previous year.
CIS is a standalone self-employed taxation scheme, unique to the construction industry. Unlike other forms of self-employment, under the scheme, workers are taxed at source. The big advantage for employers is that as workers are officially self-employed, they are not required to pay employers’ national insurance contributions of 13.8%.
A very large percentage of the workers operating under CIS are bogusly self-employed. It means that they should, in law, be directly employed. As self-employed workers, they are not entitled to employment rights. It means that they can be fired at a moment’s notice and do not receive holiday or sick pay.
Case law says that employment status is not a matter of choice, it is decided by the relationship between the worker and the employer. This is reflected in such questions as, are working hours dictated by the employer? Are they fixed? Can the worker work flexibly? Can someone else be sent to do the work? HMRC publishes guidance to help decide whether someone is self-employed.
Despite this, employers are increasingly ignoring the rules and making employment status a choice for workers, with higher rates of pay for the self-employed.
Unite General Secretary, Sharon Graham said: “The huge growth in CIS working is bad news for workers. Increasing numbers are operating via a bogus self-employment relationship, resulting in them being stripped of their rights and can be sacked without warning.
“Meanwhile, employers are laughing all the way to the bank, they don’t have to pay national insurance contributions, nor holiday and sick pay to workers.”
The very high levels of self-employment and bogus self-employment in the industry affects safety, training and productivity across the sector, as a direct result of constantly engaging and then dismissing workers once a particular job has been completed.
The 22.5% increase in CIS workers in 2 years, raises serious questions about the success of rules on CIS. Unite says the loss to the Treasury through bogus self-employment is likely to run into several billion pounds.
Unite National Officer, Jerry Swain said: “These figures are alarming, the increase in CIS workers is not reflective of any increase in employment in the industry.”