UK : Self-employed workers

  • Observatory: EurWORK
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  • Published on: 22 February 2009



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United Kingdom
Author:
Helen Newell
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Disclaimer: This information is made available as a service to the public but has not been edited or approved by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

There is a large minority of individuals in the UK whose working arrangements are prone to difficulties when establishing employment status. These workers commonly fall between definitions of 'employee' and 'self employed' but are generally classified as legally ‘self-employed’. While the popular stereotype is that the self-employed are high earning, entrepreneurial professionals, this is often not the case. The category of self employed worker is very wide, ranging from low paid manual workers to high-paid information technology staff, journalists and creative professionals. Their work is often characterized by few training opportunities, increased risk of accidents, uninsured losses, long hours and little employment protection.

1. Legal provisions and social security

Please provide the definition of self-employed workers which is applicable in your country.

There are no statutory definitions of 'employment' or 'self-employment' in the UK. Decisions are made in light of judicial guidance in cases dealing with tax and employment law (Deakin and Morris, 1998). Four tests are widely relied on, which consist of a number of factors taken into consideration by the courts:

Table 1: Tests used to differentiate between ‘employed’ and ‘self employed’
Test Factors
Control - who holds control over task, mode, means and timing? duty to obey orders, discretion on hours of work, supervision of mode of working.
Integration - how integral is the work to the business? existence of disciplinary or grievance procedures, inclusion in occupational benefit schemes.
Economic Reality - where does the financial risk lie? method of payment, freedom to hire others, providing own equipment, investing in own business, method of payment of tax and national insurance (NI), coverage of sick pay, holiday pay.
Mutuality of Obligation: what evidence is there of formal subordination to contract terms? duration of employment, regularity of employment, right to refuse work, custom in the trade.

Based on Burchell et al (1999:11)

These tests are designed to demonstrate the level of dependence of the individual on the employer, although the degree to which factors are taken into account is open to discretion. The mutuality of obligation is the most confusing of the tests and its widespread use has led to a situation where the distinctions between temporary, casual and fixed term workers are often confused with ‘self-employed’ status.

The tests as they stand lead to considerable confusion, often countering each other, and no one set of factors is decisive. Harvey (2001: 15) establishes that there are 11 possible outcomes of the application of the four tests on the basis of the different factors, with only two producing a definite outcome of 'employee' or 'self-employed'. Similarly, Burchell et al (1999: 43) found that out of their representative workforce sample, only 12% were found to be completely dependent, whilst only two percent satisfied all independence tests, leaving a large proportion with levels of ambiguity. In addition, there is a lack of consistency between tax, social security and employment law such that tests are more easily satisfied under certain regulations (Burchell et al, 1999). This means that legal judgements do not always coincide with tax regulations.

Briefly indicate the main differences, if any, in the social security regime of self-employed workers with no employees compared with: a) employees; b) self-employed with employees.

No distinctions are made between self employed with employees and self employed without employees.

A worker defined as 'self employed' is usually excluded from employment protection law, although they do pay lower rates of income tax and can claim back certain expenses against tax. Those classified as ‘self-employed’ generally lose all rights to all non means-tested benefits (Harvey, 2001: 20) as well as protection against unfair dismissal, redundancy compensation and guaranteed pay. (Burchell et al, 1999: 46). In terms of taxation law, those classified as self-employed are eligible for lower income tax and can offset professional expenses against tax. The problem with many of those in the ‘dependent self employed’ category is that they gain neither the advantages of tax breaks nor employment protection, being classified as ‘self employed’ for employment purposes and ‘employed’ for tax purposes.

Please indicate the existence of any particular legal forms of employment which cover contractual relationships which are commonly regarded to be mid-way between dependent employment and self-employment (if necessary, see for a longer discussion of the concept the EIRO comparative study ‘Economically dependent workers', employment law and industrial relations’).

In the UK context, the legal concept of 'worker' was used for entitlement to the Equal Pay Act and Wages Act in 1986. Many rules, regulations and rights apply only to employees, but a number apply to all workers. The precise definition of who is an employee and who is a worker differs slightly from one area of legislation to another; but in general an 'employee' is someone who works for an employer under the terms of a contract of employment, whether it is written down, agreed orally or implied by the nature of the relationship. Many casual workers are likely to be employees with short-term contracts. A 'worker' is any individual person who works for an employer, whether under a contract of employment or not, who provides a personal service e.g. a casual worker, agency worker, or some freelance workers. For the most part, genuinely self-employed people or businesses to whom an employer subcontracts are not defined as workers. All employees are workers, but not all workers are employees.

Under this wider definition, some limited elements of employment protection legislation including the National Minimum Wage Act 1998, the Employment Relations Act (ERA) 1999, and the Working Time Regulations (WTR) 1998 have been extended to some individuals who fall into the ‘dependent self-employed’ category. This has offered rights to guaranteed minimum pay, paid holiday and an average working week of no more than 48 hours. However only certain types of rights are covered - those prescribed by the specific Acts. Therefore, these workers still face difficulty in claiming eligibility for rights to non means-tested benefits such as the state pension, sick pay and Job Seekers Allowance as they make no contributions toNational Insurance funds. Some of the employment protection rights, even under the extended ‘worker’ eligibility have a qualifying period of service requirement and therefore may exclude certain workers, on very short-term contracts (TUC 2000a). For example, to be eligible for parental leave payments a birth mother/adoptive parent must establish that they have worked an average of at least 10 hours a week over the six or 12 months immediately before the expected date of delivery or adoption of a child. The opt-out clause available under the UK WTR (allowing individuals to consent to working beyond the statutory average 48-hour week) has also meant that many workers have not benefited from reduced working hours (TUC 2000a).

whether they are commonly considered as economically dependent employment;specify the main features of such forms of employment and whether they enjoy specific social security regime and, if relevant, the basic features of such special regime (please refer this illustration to the answer given to question 1.2 above).indicate any rules which generally apply to this kind of employment as for: a) working time and vacation; b) maternity and parental leave; c) sick pay and leave for sickness

There is a large minority of individuals in the UK whose working arrangements are prone to difficulties when establishing employment status according to legal tests. These workers commonly fall between definitions of 'employee' and 'self employed' but are generally classified as legally ‘self-employed’. In the UK context they are most commonly termed (although not an official classification) as:

'dependent self-employed': workers who are classified as self-employed but who are often reliant on one employer'false or bogus self-employed': an individual who objectively speaking is an employee but who, for reasons connected to the evasion of regulatory legislation is described as self-employed by themselves and/or by their employer'borderline self-employed': an individual whose legal status (employee or self-employed) is unclear (Burchell et al, 1999).

The category of workers is very wide, ranging from low paid manual workers to high-paid information technology staff, journalists and creative professionals. Often these ambiguous working arrangements are compatible with those considered 'non standard', including casual, zero hours, home-, agency, portfolio and freelance workers.

2. Recent trends in self-employment with no employees

Please provide data on recent trends in self-employment (since 2000):

Table 2. Recent trends in self-employment (2000-2007), in thousands
  2000 2003 2006 2007
  Men Women Men Women Men Women Men Women
Self-employed (no.) 2,552 1,025 2,785 1,097 2,893 1,179 2,985 1,224
Self-employed with no employees (no.) n/a n/a n/a n/a n/a n/a n/a n/a

Source: Office for National Statistics (2007: Office for National Statistics, Labour Market Statistics First Release, November 2007 page 20. www.statistics.gov.uk/pdfdir/lmsuk1107.pdf

The data source does not distinguish between self employed with employees and self employed with no employees.

Please report, according to available research and studies,

the distribution of self-employment without employees across sectors and occupations;

Table 3. Self-employment by industrial sector, winter 2005/06
  All 3,731 thousand % Male 2,733 thousand % Female 998 thousand %
Agriculture, hunting and forestry 5.3 6 3.6
Energy, electricity, gas and water supply - - -
Manufacturing 6.5 6.8 5.8
Construction 22.9 30.7 1.7
Distribution 14.7 13.7 17.4
Transport, storage and communications 7.4 9 3
Banking and finance 20 19.7 20.9
Public Administration 10.7 5.6 24.4
Other services 12.3 8.3 23.1

Source: Office for National Statistics (2006: Labour Force Survey) Employees and self-employed by industry sector www.statistics.gov.uk/StatBase/Expodata/Spreadsheets/D7923.csv

whether self-employment without employees has either increased or decreased significantly in recent years (since 2000) in specific:

Sectors and activities.

Between 2002 and 2003 the banking, finance and insurance industry sector experienced the largest increase (120,000) in the number of self employed, while the number of people in professional occupations increased by 69,000. Whilst an increase in self-employment over the period 1986-90 was attributed to an increase in entrepreneurial activity due to government incentives and social attitudes and a subsequent fall in 1998 to an initiative led by UK tax authorities, the Inland Revenue, which caused many construction workers to reclassify themselves as employees, there have been no obvious reasons for more recent increases (2002-3) in the number of self-employed people. According to Macaulay (2003) there was a large increase in the number of self-employed in the year 2002-3, for both men and women working full-time and part-time. Breaking the figures down, the rise in self-employment has been predominantly driven by the 35-49 age group, although large increases were also seen in the 50-64/59 and 65/60 and over age groups. Industries that have dominated the increase are banking, finance and insurance, which included large increases within the real estate, renting and business activity area, and construction. There were increases in professional, and associate professional and technical (of whom many could be in the banking, finance and insurance industry sector). The increase in financial and investment analysts and advisors broadly seems to support stories in the UK media about City job losses leading to people moving into self-employment. The increases in the banking, finance and insurance sector seem to be the driving force behind the recent upswing in the national trend, whereas the increase in construction appears to be part of an existing trend. However, self employment in a broad range of occupations has been increasing, from IT to accountants to taxi drivers.

Occupations (International Standard Classification of Occupations – ISCO 88, at one digit).

Table 4. Self-employment by occupation, winter 2005/06
  All 3,731 thousand % Male 2,733 thousand % Female 998 thousand %
Managers and senior officials 17.7 17 19.6
Professional Occupations 13.8 13.6 14.3
Associate Professional and Technical Operations 15.6 13.6 21.1
Administrative and Secretarial 3.1 0.7 9.4
Skilled Trades 28.8 37.1 6.3
Personal Services 5.4 1 17.2
Sales and Customer Service 2.1 1.6 3.7
Process, plant and Machine Operatives 8.3 10.5 2.1
Elementary Occupations 5.3 4.9 6.3

Source: Office for National Statistics (2006) Labour Force Survey Employees and Self Employed by Occupation www.statistics.gov.uk/StatBase/Expodata/Spreadsheets/D7917.csv

and in specific groups of workers defined by:

Gender (men/women).

See information contained in tables above. In addition, in 2002-3, women accounted for 29% (82,000) of the new self employed, with over half choosing to work part time. Two significant groups can be identified amongst these new self employed workers: 8,000 of the women were part time teaching professionals and 7,000 were full time child minders and related professions (Macaulay 2002).

Age groups (younger/older; 14-24, 25-54, 55-64; 65 and over).

Self-employment is more common among older workers than among those under 50. According to the National Office for Statistics, in spring 2004, 19% of people aged 50 and over in the UK were self-employed compared with 14%of people aged 25-49. Self-employment was also more common in older men than older women (26% compared with 11% respectively). Men in their 50s who were self-employed were much more likely than those who were employees to still be working 10 years later.

Nationality (nationals/foreign nationals).

Not available.

Other relevant dimensions to be specified.

Whilst there is no data available on the breakdown of nationality and self employment, there is some interesting data on ethnicity and self employment. In 2004 people in employment from Pakistani, Chinese and white Irish groups were more likely to be self-employed than those in other ethnic groups in Great Britain. One in five Pakistanis in employment were self-employed (21%), as were just under one in six Chinese (16%) and White Irish (15%) people. This compared with around one in 10 (12% white British people and fewer than one in 10 people from a mixed or black ethnic group (www.statistics.gov.uk/cci/nugget.asp?id=463).

Based on existing research and studies, please provide any available data on the diffusion and recent trends of:

All legal forms of employment indicated in section 1.3 above (contractual relationships mid-way between dependent employment and self-employment and economically dependent employment), specifying whether they concentrate in any sectors and/or occupations.

Please see the response to section 2 b above. Studies indicate that the majority of such workers in the UK are in traditional job sectors (rather than high-paying creative and IT sectors).

‘Bogus self-employment’, i.e. formal self-employment which is fraudulently used to disguise contractual relationships which should be properly registered as dependent employment, in order to avoid the protections and costs (both wage and social contributions) connected with the latter, specifying whether it concentrates in any sectors and/or occupations.

Accurate statistics are not available. The source of official data on the UK labour market is the Labour Force Survey, however this relies on self-report of employment status, which does not necessarily correspond to the legal classification. Burchell et al's (1999) survey of a representative sample of 4,000 workers found that 30% have an ambiguous employment status of which eight percent were legally classified as 'self-employed’.

The distribution of the 'self employed' workforce is the most appropriate source of estimated numbers across sectors. Such analysis indicates that the ‘dependent self-employed’ are most likely to be found in Construction (40% self-employed), Transport and Communications (13.4%), Finance and Business (13%) and Distribution, Hotels and Catering (c11%). The TUC (2000b) also points to large proportions of ‘dependent self-employed’ amongst freelance journalists, musicians and performing artists and lorry drivers although no statistics are given.

Harvey (2001) analyses the growth of self-employment in construction and demonstrates that the construction industry is characterised by the spread of ‘false self-employment’, which may account for around 361,000 workers (two-thirds of the total ‘self-employed’ in the industry). Harvey’s argument is that the high number of ‘dependent and false self-employed’ in the construction industry derives from both the confusion inherent in the legal framework of employment status, employer advantage derived from special taxation arrangements applied to construction, and the flexible nature of the work (see also TUC, 2000b). The construction industry is currently the subject of a lot of publicity over these issues following a high profile campaign by the Union of Construction, Allied Trades and Technicians (UCATT) over employment in the construction industry for the development of the facilities for the 2012 Olympics.

3. Collective representation and collective bargaining

NCs are requested to indicate the main collective representation organisations of employed workers with no employees or of the workers with the special contractual relationships illustrated above in section 1.3. In particular, they should provide information on:

The type of associations (trade associations or trade unions).The associational domains of each of such associations: territorial, sectoral, occupational, professional, etc.Membership and membership rates.Any forms of social dialogue or collective bargaining these associations engage in, specifying:

The levels at which such activities take place (national, sectoral, territorial, company).The actors they engage in these activities with (public authorities, employers associations, single employers).The topics typically covered by these activities.The typical outcomes of such activities (joint documents and declarations, guidelines, agreements, etc.)A brief description of the content of some (two or three) of the main and most recent of such documents.

Unions in industries with concentrations of self employed workers do act in a representative capacity, including the UCATT, BECTU, Equity, and the National Union of Journalists (NUJ). No official statistics are available relating to density or membership of ‘dependent self-employed’. Unions such as UCATT and BECTU have been particularly active in representing members at Employment Tribunals to gain rights to employment protection (Harvey, 2001: 35). In addition, UCATT has been particularly concerned with the need to upskill industry members and has negotiated with a large construction company to set up a training centre (www.scotland.gov.uk/pages/news/2002/01/SE5190.aspx). Rights and advice for freelance journalists specifically have a high profile within the NUJ (see www.nuj.org.uk).

There is some evidence of opposition from certain groups of workers to the notion of traditional trade union representation: this is notably from the more highly paid freelance journalist and IT professional end of the category.

Some unions have also been successful in concluding single employer collective agreements which cover categories of workers such as freelancers (see examples from BECTU at www.bectu.org.uk/resources/agree/index.html or Equity at www.equity.org.uk).

4. Employment and working conditions

Wage levels, of self-employed workers without employees compared with the national average.

The Annual Survey of Hours and Earnings conducted in the UK does not cover the self-employed.

The incidence of low-paid jobs (that is, according to the OECD definition, jobs which pay less than two-third of the median wage) among self-employed workers without employees compared with the national average.

The popular stereotype that the self-employed are high earning, entrepreneurial professionals is not true for the majority of cases. In 2003 the first four-fifths of self-employed people in the income distribution earned less than the first four-fifths of employees. However, the highest earning one-fifth of self-employed people earned more than employees, so that the average earnings of the self-employed were £121 per week higher than for employees (Weir 2003).

The Low Pay Commission’s analysis of the Labour Force Survey suggests the following changes in self employment in the low pay sectors (2007:70). Self-employment has increased by around 25% in both the hairdressing and cleaning sectors since the introduction of the minimum wage in the UK in the 1998. This represents an increase in the level of self-employment by 20,000 in hairdressing and 10,000 in cleaning. Self-employment fell by nearly 20% in both hospitality and residential social care, with the levels falling by 30,000 and 3,000 respectively. However, the largest reductions in the level of self-employment were in the retail and agriculture sectors (both fell by around 35,000).

Based on median weekly wages, the highest paid occupations in 2004 included medical practitioners (GBP1,168), pilots (GBP1,094), senior police officers (GBP825) and IT managers (GBP795). The lowest paid occupations included hairdressers (GBP219), bar staff (GBP213), check-out operators (GBP204) and florists (GBP197) (see www.esrcsocietytoday.ac.uk/ESRCInfoCentre/facts/index41.aspx?ComponentId=12619&SourcePageId=7119).

Working hours, of self-employed workers without employees compared with the national average:

Table 5. Usual weekly hours of work, July to September 2007, in thousands
Category < 6 hours 6-15 hours 16-30 hours 31 – 45 hours Over 45 hour
All employees 25, 175 284 1,705 4,474 13,914 4,798
Male 12,925 77 414 865 7,899 3,670
Female 12,250 207 1,291 3,609 6,015 1,128
Self Employed 3,837 100 301 684 1,528 1,223
Male 2,774 34 107 354 1,238 1,041
Female 1,063 66 195 330 290 182

Source: Labour Force Survey: Usual Weekly Hours www.statistics.gov.uk/downloads/theme_labour/LMS_FR_HS/WebTable08.xls

Average hours actually worked per week.Diffusion of long working hours (more than 10 hours a day).Diffusion of work at unsocial hours (night, weekend).

According to a recent survey by Professor Simon Parker and Olufunmilola Ajaji-obe (2006) (www.esrcsocietytoday.ac.uk/ESRCInfoCentre/PO/releases/2006/april/self-employed.aspx?ComponentId=15022&SourcePageId=13404), funded by the Economic and Social Research Council, self-employed male Britons have been found to work longer hours for lower wages than those of their employee counterparts. This the researchers attributed to the fact that the self employed face greater uncertainty and so working harder is a way to insure their future livelihoods. They also found that self-employed people were less satisfied with the length of time they felt they had to work than employees. Given the chance,like employees, male self-employed Britons will respond to higher earnings by working fewer hours.

Bell and La Valle (2003) found that different types of business placed different types of demands on the owner of the business and their families. The patterns of working were very diverse and can be described under four categories.

Time-greedy businesses These businesses involved the longest, most unsocial and most unpredictable hours, often at the expense of family time. Most owners were men, and almost all the male-led businesses were in this category. Heavy demands of the business tended to impinge on the home; for example, telephone calls at unsocial hours.

Rigidly scheduled businesses These had working hours and practices similar to traditional nine-to-five employment. They invariably had premises outside the home. Some weekend and evening work was normal, but was regular and predictable. Such businesses were typically run by women; where they had young children. These businesses were more likely to have employees, who could give the owner more freedom than single-woman businesses.

Flexibly scheduled self-employment A few owners - all one-woman businesses without employees - scheduled work around family needs and routines but would also use child-carers from outside the household.

Work-family inclusive businesses These were based inside or adjacent to the home, with the home and the family physically and emotionally incorporated into the business. The home environment was actively promoted to clients as an asset and, in contrast to the flexibly scheduled group, business was conducted in the presence of young children.

Place of work of self-employed workers without employees compared with the national average:

Home/office distribution.

There is no direct data available onhome/office distribution of work. However, Burchell et al, (1999: 41) point to the similarity between the arrangements of those workers who have ambiguous status and those who have 'employee' status, including: 90% hold permanent jobs, 70% have worked for only one employer in the last six months, 60% have a written statement of particulars of their job, and two-thirds are paid a monthly salary or weekly wage. Similar findings emerge in the construction industry context (Harvey, 2001).

Exposure to risks and accidents at work of self-employed workers without employees compared with the national average:

Work accident rates.

In relation to the agricultural sector the Health and Safety Executive (HSE) has noted a worrying trend amongst accident statistics that presents a special challenge. Whereas within the agricultural sector the employee fatal incidence rate roughly halved during the 15-year period to 2001, the rate for the self-employed and family-farm sub-sector was consistently higher and more than doubled. Moreover, this latter rate increased markedly over the five years to 2001. This analysis suggests that whereas HSE’s regulatory approach, which historically concentrated on inspection, had been successful in respect of the larger enterprises with a management structure in place, it had not succeeded with the increasing proportion of self-employed and small family farmers – for reasons that are not difficult to understand. The decline in overall employment, and a parallel decline in the number of larger farms, has been accompanied by increases in the number of smallholdings, self-employed units, contracting-out, part-time and niche market farmers. These trends are expected to accelerate markedly over the next10years and the projected increase in the poorer-performing self-employed sector is therefore likely to impact adversely on injuries and statistics (www.hse.gov.uk/agriculture/hsagriculture.htm).

Health outcomes, work-related health problems and occupational illnesses of self-employed workers without employees compared with national average:

Occupational illness rates.Work intensity and stress at work

The HSE statistics also show that prevalence rates were higher among employees than among the self-employed for stress, depression or anxiety (1.4% of employees and 0.8% of the self-employed). The opposite was true for musculoskeletal disorders (1.9% of employees and 3.0% of the self-employed) (www.hse.gov.uk/press/2003/e03111.htm).

Lifelong learning of self-employed workers without employees compared with the national average:

Participation rates in continuous education and training.

There is no direct evidence on this point.However, most studies agree that the self-employed generally do not receive the same amount of training as those in employment.

Work-life balance of self-employed workers without employees compared with the national average:

Presence and take up rates of maternity/parental leave (according to the applicable social security regime).

Self employed women are entitled to maternity allowance provided they have worked for at least 26 of the 66 weeks before the week the baby was due (a part week counts as a full week) and earned an average of GBP30 over any 13 of those 66 weeks. The standard rate of MA is GBP112.75 or 90% of average weekly earnings, whichever is less. Maternity leave as such is not available. To qualify for paternity pay and leave in the UK an individualmust be an ‘employee’. If an individual isa ‘worker’ theywill not qualify for leave.

There is no available data on take up of maternity leave amongst self employed women.

Presence and take up rates of long-term leave (according to the applicable social security regime). If possible, please indicate the reasons for long-term leave.

No data available.

Degree of control of personal working time.

According to directgov.uk the government’s website, “You do not have employment rights as such if you're self-employed since you are your own boss and can therefore decide, for example, how much to charge for your work and how much holiday to give yourself. You do have some legal protection. For example, you mustn't be discriminated against and you're entitled to a safe and healthy working environment on your client's premises”. There are therefore no restrictions on personal working time for the self employed worker (www.direct.gov.uk/en/Employment/Employees/EmploymentContractsAndConditions/DG_10027916).

Degree of consistency of personal working time with family and social commitments.

A recent Joseph Rowntree report on combining self-employment and family life was undertaken by Alice Bell and Ivana La Valle of the National Centre for Social Research (NatCen). They analysed two surveys which were representative of over 10,000 parents with children aged 0-14 in England. The study found that:

A quarter of families with children included at least one self-employed parent. Many mothers entered self-employment because they believed it could offer working arrangements that made it easier to reconcile paid employment with family responsibilities. This did not feature in most fathers' decisions to become self-employed. For many mothers, self-employment meant having more family-friendly working arrangements, such as the ability to choose when and where to work. For some mothers and most fathers, self-employment meant working long, atypical hours, and more frequent weekend work than for parents who were employees. Patterns of childcare use varied considerably among self-employed mothers. Those with employees were more likely to use (non-parental) childcare, relied on formal provision and had higher childcare costs. Among those without employees, levels of formal childcare use and expenditure were lower. These patterns of childcare use also seemed to reflect differences in work patterns. Self-employed mothers with employees were more likely to work long, atypical hours, while the majority of those without employees worked part-time. Self-employed mothers were more likely than their employee counterparts to report unmet demand for childcare. For those with employees, these difficulties might be linked to the amount of childcare required and the need for provision at 'non-standard' times. However, for those without employees, the difficulties might be related to lack of affordable childcare, as many of them were in low-paid jobs.

The study consisted of in-depth interviews with self-employed men and women, their partners and children in 30 households investigated the difficulties of reconciling paid work and parenting for such families. Non-monetary rewards featured strongly in men's accounts; for some, unacceptable working conditions pushed them into self-employment; for others it was the positive attraction of intrinsically rewarding work. A strong theme was men's wish to avoid disruption to family life caused by working outside the region. 'Being there' for their families was important. Women returning to the labour market by starting a business tended either to wait until their children were older, or to set up as childminders so that they could look after their own children at home. Childcare was never the only factor in the decision to become self-employed. It was mentioned by women who had spent time out of the labour market, but never by men.

Job satisfaction of self-employed workers without employees compared with the national average:

Degree of satisfaction with employment conditions.Degree of satisfaction with working conditions.

According to Oswald (2003), self-employed people enjoy their jobs hugely. Those who are self-employed like the independence. They are not in it for the cash; they are in it for personal autonomy.. In his research, job satisfaction was measured on a scale from 1 to 7, where 7 was completely satisfied. Individuals who worked for non-profit organisations average a job satisfaction score of 5.7. Those who were self-employed typically come out at 5.6 whilst the average response was 5.4.

These views are echoed to a certain extent by other researchers. Secondary analysis of the British Household Panel Survey (BHPS) (www.iser.essex.ac.uk/bhps) data by Marco Francesconi and Amanda Gosling sheds some light on differences between employed and self-employed women where the self employed women showed greater levels of satisfaction with the work itself, although not with pay or with hours worked. Not surprisingly, both part-time and full-time self-employed women show significantly lower levels of satisfaction with ‘job security’ than their full-time employed counterparts.

In a second study analysing data from the BHPS and the 2001 Skills Survey looking at differences in job satisfaction across occupations, Rose found that there were 52 percentage points separating the highly satisfied workers from thoroughly dissatisfied workers. Reproduced below are the top five and bottom five from his findings of overall job satisfaction in major UK occupations. Interestingly, childcare, educational assistants and hair dressers are all occupations where self employment is dominant.

Table 6. Overall job satisfaction in major UK occupations, percent scores above sample median
SOC90 3 digit code N cases Occupation Percent higher scores
659 64 Misc. childcare related work 75
672 24 Caretakers 71
660 27 Hairdressers, barbers 70
652 49 Educational assistants 69
900 22 Farm workers 68
825 28 Plastics process operatives, moulders and extruders 32
940 56 Postal workers, mail sorters 32
553 31 Sewing machinists, menders, darners and embroiderers 32
621 33 Waiters and waitresses 24
873 31 Bus and coach drivers 23

Source: BHPS, Wave 9 (1999 – 2000) 7,635 weighted cases: in Rose (2003:503-530).

5. The social partners’ positions

The TUC and affiliated unions have been advocating the need for equal treatment and employment protection (TUC, 2000b). This includes specific discussions on the need for an abolition of the qualifying period for WTR rights, codes of practice on teleworking, and better regulation of Recruitment Agencies (TUC, 1999) to establish a framework of minimum standards. Through the actions of unions like BECTU, from October 2001, freelance workers now have a statutory right to paid leave on all new contracts regardless of length, effectively abolishing the qualifying period. In the construction industry, it is felt that the abolition of the special tax arrangements (allowing the existence of self-employed people who are taxed at source) would enable many more workers to gain some benefit from being legitimately self-employed, or to force a status recognition as an ‘employee’ (Harvey, 2001: 16-21). This has some support from the larger construction companies in a context of skills shortages to regulate skilled contractors charging a premium rate.

UCATT is currently deadlocked in discussions with the Olympic Delivery Authority about what form of labour will be used on the Olympic site. UCATT believes that direct labour would allow for stable employment and also mean that the companies involved would also be required to recruit hundreds of apprentices, who will have the opportunity to develop life-long skills. If the direct labour model is not adopted then the Olympics will be built with sub-contracted labour. UCATT argues that past experience shows this will mean that training is non-existent. It also believes that safety and security practices are also likely to be weaker. Britain is currently experiencing a chronic construction skills shortage, resulting in a huge demand for migrant labour. The skills shortage is set to greatly worsen over the next 10 years when a huge number of skilled workers are set to retire. Last year there were 50,000 applications for construction apprenticeships but only 9,000 places available.

Equity (www.equity.org.uk) appears to be the only trade union that has been campaigning to establish a special status for its members that would classify performing artists as ‘employees’ for employment protection purposes and ‘self-employed’ for taxation purposes. Equity successfully resisted an attempt to reclassify performers as ‘employees’ in 1990 (TUC, 1999).

There are clear economic incentives for employers to hire people as ‘self-employed’, giving a labour cost saving immediately of around 12.2% (no employer national insurance or employer-provided benefits) (Harvey, 2001: 20). There is also clear evidence that self-employment has now taken over from direct employment as the core and majority workforce on major construction sites. Emphasising the ambiguous status of these workers in 1995, while 85% of the workforce on 10 major construction sites were self-employed, 65% of these had income tax deducted at source by the employer (thus forming a type of taxed self employment unusual to construction). Employer preference as a factor in perpetuating the levels of ‘dependent self-employed’ does appear to be a common factor in many of the reports and studies.

6. NC Commentary

Workers falling into the 'dependent self employed' category form a substantial minority of the UK labour force, particularly in certain industrial sectors such as construction, many of whom face particularly vulnerable work arrangements, lacking any employment protection. The worst off are those who are classed as employed for tax purposes and as self-employed for employment protection purposes. Using the concept of 'worker' rather than 'employee' has already extended employment rights to some of these individuals and trade unions should continue their campaign for the extension of coverage of other employment legislation. Recommendations have been made that increasing use should be made of the classification ‘worker’ rather than ‘employee’. It is estimated that the use of the worker definition might protect up to a further 5%of all those in employment (or about 16% of those whose employment status is ambiguous). There are also recommendations that the ‘economic reality’ test of employment status should be the sole relevant test of employment status, whether or not someone was in business ‘on their own account’ would then be the test of economic independence. This would avoid the confusion of independence with casual or irregular contracts and intermittent contracts of different duration (Harvey, 2001: 52).

References

Bell, A. and La Valle, I. (2003) Combining self-employment and family life, The Policy Press (www.jrf.org.uk/knowledge/findings/socialpolicy/663.asp).

Burchell, B, Deakin, S and Honey, S (1999), The employment status of individuals in non-standard employment, Department of Trade and Industry.

Deakin S and Morris, GS (1998) Labour law, Butterworths.

Harvey M (2001) Undermining construction, London: Institute of Employment Rights.

Health and Safety Executive (HSE) (2000) Health and safety in broadcasting and the performing arts.

Macaulay, C. (2003) Changes to Self Employment in the UK 2002-3, Office for National Statistics.

Francesconi, M. and Gosling, A. (2005) Career Paths of Part-Time Workers (2005) Report to the Equal Opportunities Commission, EOC Working Paper Series No. 19. Manchester: EOC (www.statistics.gov.uk/articles/labour_market_trends/self_employment_1203.pdf).

Low Pay Commission (2007) The National Minimum Wage Low Pay Commission Report, March.

Oswald A. (2003) If You Want an Enjoyable Job, What Should You Do?, Sunday Times, January (http://www2.warwick.ac.uk/fac/soc/economics/staff/faculty/oswald/jobsatisfaction2003.pdf).

Rose, M. (2003) Good deal, bad deal? Job satisfaction in occupations, Work Employment and Society, vol. 17:3 pp 503-530.

TUC (1999) Regulation of the private recruitment industry (www.tuc.org.uk/law/tuc-360-f0.cfm).

TUC (2000a) Working Time Regulations - Congress motion (www.tuc.org.uk/congress/tuc-2634-f22.cfm).

TUC (2000b) Annual Congress decisions 2000 (http://www.tuc.org.uk/congress/tuc-2916-f0.cfm).

Weir, G. (2003) Self-employment in the UK labour market, Labour Market Trends, vol. 111, no 9, pp 11. (www.statistics.gov.uk/CCI/article.asp?ID=425&Pos=1&ColRank=2&Rank=896)

Helen Newell, University of Warwick

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