After so many years of pushing for tougher regulation on self-employment, trade union UCATT celebrated when HMRC’s new control test, limiting the number of people who are entitled to freelance status was introduced, back in April.

But since then, things haven’t turned out as expected. . .

Rather than gathering hoards of new employed members, signing up to collective agreements, and banging on boardroom doors, UCATT has found itself inundated with complaints from freelancers who had been more than happy with CIS arrangements, but – as a direct result of the legislation UCATT called for – have been pushed into umbrella schemes.

There is no serious argument to counter the fact that self-employed tradesmen and agency workers in construction command higher rates of pay than their employed counterparts; UCATT even acknowledges that those who promote self-employment “…feed off the greed of the workers…” (their words, not mine).

Be careful of what your union wishes for

However, contractors and agencies need flexibility, and full employment is simply not compatible with the rates their clients are willing to pay. To an extent, umbrella companies seem to solve the issue – by acting as a third party and dumping the cost on the operative.

Hardly surprising then that UCATT is now attacking the umbrella arrangements that have taken the place of self-employment intermediaries.

The umbrella schemes are taxed under PAYE, and if done properly, they comply fully with tax legislation. But UCATT is complaining that most don’t do things properly.

In a report called The Umbrella Company Con-Trick, UCATT begins by naively complaining, “Our workers saw no increase in their wages.” The report goes on to accuse umbrella companies of ripping off the taxman – by as much as £3,800 a year for an operative on £500 a week – by ‘using expenses to top up pay’.

According to UCATT, umbrella companies:

• Take unreasonable fees from workers
• Hide behind confusing payslips
• Charge workers for their own employers’ national insurance
• Pay below the rates that have been agreed
• Roll-up holiday pay

Umbrella schemes are nothing new, so perhaps the biggest surprise about this report is that UCATT didn’t see this one coming.

The fact is –although it is probably of no consolation to UCATT – that I fully agree with the union’s criticism of these schemes. In Hudson Contract’s experience, it is common with umbrella companies for fees deducted from workers to be recycled as inducements back to the agencies and their owners.

The Hudson Difference

Thankfully, those using either Hudson Employment Services or Hudson PAYE Services will see the difference between what we do and what UCATT attack the umbrella companies for doing.

• Our payslips are clear and come with a guide
• We do not charge a fee to operatives for processing a payroll
• We always pass on the payment rate that has been agreed
• We pay separate holiday pay
• We would never charge an operative the cost of employers’ national insurance
• Our dispensation scheme is properly run and used only if an operative has an express wish to do so

One final thought

Seeing how things have panned out for UCATT members, and the pool from which they hope to recruit new members, you would think the union might ease off on its call for an end to CIS.

No chance! In fact, UCATT is lobbying for even tougher rules.

Or to put it another way, the turkeys have voted for Christmas, and now they are trying to make the stuffing.