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Payroll companies are costing the Revenue millions in lost National Insurance contributions and denying workers even the most basic employment rights.
The Mirror's investigation exposed how payroll companies enable companies and employment agencies to very easily officially register workers as self-employed, when in reality they are employees.
By using a payroll company to register workers as self-employed, the companies concerned can avoid paying employers national insurance contributions of 12.8 per cent. As the workers are officially self-employed they are denied even the most basic employment rights, meaning that they can be sacked without notice or reason, do not receive holiday pay and are not paid sick pay.
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In a perverse twist, the workers themselves rather than the contractor they work for, has to pay the payroll company for its services. Payroll companies either deduct a flat fee or a percentage of earnings directly from the workers pay.
UCATT have written to both the Inland Revenue and David Gauke MP the Exchequer Secretary who has responsibility for tax avoidance demanding an urgent investigation into the practices of payroll companies and emphasising that this is further evidence of the extremely high levels of false self-employment in the construction industry.
Alan Ritchie, General Secretary of UCATT, said: "There has been a huge growth in payroll companies. These companies do not perform construction work, nor do they hire labour to companies, their sole reason for existence is to enable companies to deny workers basic employment rights whilst avoiding paying national insurance contributions. The Government and the Revenue need to intervene to end these practices once and for all."
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