Less scrupulous firms are denying workers 'employee' status - which brings staff benefits

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Citizens Advice is calling on the government to more accurately define what constitutes ‘self-employment’, after its new report finds businesses are using the term to describe people that work for them that should be given ‘employee’ status instead.

In its paper, entitled ‘Neither one thing nor the other’, Citizens Advice claims the practice of calling workers ‘self employed’ denies them a range of staff benefits (like maternity, holiday and sick pay) that they are actually entitled to.

It finds one-in ten of people who identified themselves as working for themselves could be wrongly employed – a level which if extrapolated nationally, means ‘bogus’ self employment is losing the government £314million in taxes.

By calling people self employed, these workers (up to 460,000 across the UK), are losing an average of £1,200 in holiday pay alone, says Citizen Advice.

Gillian Guy, chief executive, Citizens Advice, said: “There are workers who are missing out on more than £1,000 a year because they should legally be official employees.

Depending on the number of hours worked; whether the person uses the business’s equipment, and whether they have tax deducted at source, a self-employed freelancer could be classed as an employee.

The problem, says Citizens Advice, is that HMRC and the Department for Work and Pensions, have different definitions of self-employment, making it difficult for workers and businesses to know their exact employee status.