UK self-employed workers may have ‘worst of both worlds,’ says study

A significant number of self-employed workers in the United Kingdom appear to have the “worse of both worlds.” Not only do they get a worse deal at work compared to employees, they may also be failing to enjoy the benefits traditionally associated with self-employment, such as greater autonomy over job tasks or work hours.

So concludes a new study from the Social Market Foundation think tank that examines the gap between employees and self-employed.

UK self-employed workersNearly a third (32 percent) of UK self-employed workers say they do not have a lot of autonomy over their hours of work. Image: pixabay

The study follows a government review that reveals there are 4.6 million (15 percent of the nation’s workforce) self-employed workers in the UK. This is the highest it has ever been.

Using data from the Understanding Society survey – which follows the lives of 40,000 UK households – the SMF find that on the whole UK self-employed workers report having more autonomy than employees.

However, a significant minority – 20 percent – of self-employed workers say they do not have a lot of autonomy over work tasks and an even bigger proportion – 32 percent – report not having a lot of autonomy over work hours.

From Labour Force Survey data, the SMF also found that when they do work overtime, UK self-employed workers are less likely to be paid compared to employees (71 percent and 62 percent respectively).

The SMF remark that the very fact so many self-employed people report working overtime at all – 13 percent according to their analysis – “is in itself surprising.”

“Working overtime suggests more control by the person paying for work than we might assume in self-employment,” says the report.

The analysis reveals that self-employed workers are also:

– only half as likely as employees to receive training
– only half as likely as employees to take days off sick
– less likely to save from their earnings (11 percent fewer savers among self-employed compared with employed workers)

The report’s author, Emran Mian, director of the Social Market Foundation, says:

“This new research suggests that self-employed workers may be getting the worst of both worlds. At the very least, people may look and behave very much like employees and yet lack the rights and protections of employees.”

Categories do not reflect today’s complex labour market

Mian says the simple categories “employment” and “self-employment” do not reflect the complexities of the labour market.

In doing their research, SMF found it difficult to find differences between UK self-employed workers and employees in some of the data sources they examined.

“The variation within each employment status may be more significant than the difference between them,” they note.

For instance, you might have a person whose status is correctly described as self-employed – they work for several employers and control their own working hours and tasks – and yet they do not benefit from the same tax treatment as other self-employed people.

“The challenge this variation poses is that our tax system and the rights and protections offered through employment law may no longer fit the reality of the labour market,” says Mian.

Avoiding employer responsibility

One concern is that employers could be hiring self-employed workers but treating them like employees in order to avoid paying National Insurance, minimum wage, and holiday pay.

This was highlighted in a recent landmark case that found against Uber, who insisted the drivers they hired were self-employed.

The tribunal ruled the drivers were under Uber’s control and so should not be viewed as self-employed but as employees and given the same rights, such as being paid minimum wage, sick pay, and holiday pay.

Or sign of greater labour freedom?

Another view is that the labour market is changing and bringing more people more freedom and choice in how they work. Work and pensions secretary Damian Green said in a speech recently:

“Just a few years ago the idea of a proper job meant a job that brings in a fixed monthly salary, with fixed hours, paid holidays, sick pay, a pension scheme and other contractual benefits.”

Now what we are seeing are more and more opportunities for people to control their time, who receives their services, and when. “They can pick and mix their employers, their hours, their offices, their holiday patterns,” he adds.

Mian says the SMF are going to continue the research to better understand some the issues raised in the paper.