76. During our last inquiry into health and safety,
UCATT highlighted the fact that, within the construction industry,
there are high levels of "bogus self-employment" i.e.
individuals who are contracted and work under the Construction
Industry Scheme, when they should in fact be classified as employees.
77. The Construction Industry Scheme (CIS) sets out
the rules for how payments to subcontractors for construction
work must be handled by contractors in the construction industry.
The scheme applies mainly to contractors and subcontractors in
mainstream construction work. According to UCATT, bogus self-employment
occurs when a worker who has all the characteristics of an employee
is classified as self-employed for tax purposes. The vast majority
of bogus self-employed workers operate under the Construction
Industry Tax Scheme. Workers are taxed at source (20%) like a
normal employee, pay lower national insurance contributions and
are entitled to make an annual tax return. As the workers are
classed as self-employed, employers do not pay any national insurance
contributions and the worker pays a lower rate than a PAYE employer.
78. UCATT has argued that the "safety imperative
is obviously reduced when you do not have a directly employed
workforce" and has been trying to prove the increased risks
faced by the bogus self-employed, by showing that there is a disproportionate
number of these workers amongst construction fatalities.
Their concerns have grown further since learning that in their
fatality investigations, HSE would record "bogus self-employed"
workers (registered under the CIS regime), as employees in their
79. UCATT have suggested that the reason why HSE
inspectors reclassify the employment status is that they aim to
record the employment status that a worker should have had rather
than the status that they may have been given. Recording a worker
under the correct, directly employed status makes it easier for
dependents to receive compensation.
However, this also means that the percentage of fatally injured
workers working "self-employed" under CIS is not reflected
accurately in the statistics.
80. UCATT highlighted the case of a 22 year old man,
who was supposed to be an apprentice at the time of his death,
and yet was working under CIS and therefore would have been classified
as self-employed. HSE did not record the man as worked under
the CIS scheme but his self-employed status was confirmed when
his family received a tax rebate from CIS on the day of his death.
81. We asked Geoffrey Podger whether HSE believed
lowering levels of bogus self-employment would reduce health and
safety risks, he said:
"there is a very strong health and safety argument,
which is that the people who are running construction sites have
to have control over the totality of the people who are there
irrespective of what their technical employment status is."
82. Rita Donaghy's recently published report on deaths
in the construction industry condemned bogus self-employment and
"If the political will existed and enforcement
mechanisms were properly resourced it is probably the single most
important step which could be taken to signal to the industry,
and its workers, that society expects standards to be improved
and obligations fulfilled."
note the concerns of UCATT that bogus self-employment may make
workers more vulnerable to health and safety risks. HSE efforts
to correct and reclassify the employment status of fatally injured
workers are useful for ensuring that family members are able to
claim for compensation. However, we are concerned that the Construction
Industry Scheme (CIS) may provide the loop hole that allows bogus
self-employment in the first place. We ask the Government to
examine whether this is the case. In the meantime, Revenue and
Customs should ensure that it communicates the risks of bogus-self
employment to those participating in the CIS.