A report conducted by industry body, Freelancer and Contractor Services Association (FCSA), and online accountancy software provider, FreeAgent, found that Freelancers would choose to receive sick pay over any other statutory benefit.
The study which was based on 900 small business traders and freelancers shows that over maternity pay, job seeker’s allowance, and pension auto-enrolment, freelancers would prefer to receive sick pay.
As a self-employed professional working through a limited company, you are not eligible to receive any employment rights, including the above.
If you decide to run your contract through an umbrella company, the umbrella business will essentially become your employer, which means that you’ll be eligible for employment rights.
FCSA, the UK’s largest independent trade association, found that,
“76% of respondents currently do not have any method of providing sick pay, maternity/paternity pay leave, holiday or redundancy pay in their business.”
“Projected across the country’s 5.2 million-strong micro-business sector, this potentially equates to millions of people working without the same kind of basic entitlements that employed workers have.”
These findings have been released in time for the publication of Matthew Taylor’s report into employment practices affecting the self-employed, including an in-depth analysis of the taxing system.
The report will suggest how the current practices should change in order to keep up with modern business models.
Ed Molyneux, CEO and co-founder of FreeAgent, said,
“The UK Government seems determined to ‘level the playing field’ between self-employed and employed workers, but this is actually very unfair on people who run very small businesses, as it does not take into account the huge amount of personal risk that it associated with being self-employed.”
“Ideally, the UK’s millions of freelancers and micro-business owners should be able to enjoy the same statutory entitlements as their employed counterparts.”
“I therefore hope that the forthcoming Taylor review will be looking closely into this issue, and that the report will make suitable recommendations.”
There has been increased pressure around the lack of employment rights for gig-economy workers and contractors since the IR35 public sector reform.
The highly controversial framework enforced in April now means that if you’re a public-sector contractor, the public-sector body will be responsible for determining your IR35 status. If you are then caught under IR35, you will be taxed as an employee would, but without the employment rights.
IT contractor, Mike Gibson, has launched a £10.5k IR35 Crowdfunding campaign, hoping to establish grounds to successfully challenge it in court, read about it here.