REC counters claims about bogus self employment in construction

Released on 7 January 2011

Following a call yesterday by UCATT for a Government review of payroll companies in the construction sector, the REC has emphasised the need to strike a balance between stopping false self-employment and ensuring that the UK construction industry retains its flexible workforce.

Under current regulations, self-employed workers must be registered with both HMRC and the Construction Industry Scheme (CIS) before any payment is processed. Construction companies work closely with HMRC to verify the status of every sub-contractor paid within the CIS.

Kevin Green, the REC’s Chief Executive said:

“We are committed to working effectively with the Government to address examples of bogus self-employment. However, it is also critical for the UK economy that we promote legitimate self-employment. Only yesterday, the Prime Minister announced that the Government wants to grow self-employment by providing more support for the unemployed to set up their own businesses.

“If we want to retain a dynamic construction industry in the UK we need to retain its use of a skilled and flexible workforce. Payroll companies help the self employed particularly with the administration of pay. Together with the review of iR35, we urge the Government to look into this whole area as part of their commitment to help small businesses and entrepreneurs.”

Simon Noakes, Chair of REC Construction said:

“Recruitment agencies specialising in construction within the REC work hard to raise standards and to provide a first class service to employers and contractors. We fully support the effective enforcement of existing regulations.

“It is important to note that the vast majority of self-employed workers in construction choose to work in this way. The idea that contractors are somehow coerced into bogus self employment is wide of the mark. It is also important to recognise that construction businesses need a flexible workforce, especially as the market remains volatile with profits on projects being reduced “

Simon Noakes added:

“Companies need to know that competent, self employed professionals are out there to meet short term increases in demand, while at the same time controlling fixed costs. The added value provided by specialist recruitment agencies gives construction companies at all sizes the confidence to tender for large scale projects.

“With landmark projects such as the Olympic Games in and Westfield shopping centre, there is currently over 5000 construction operatives working in Stratford alone. Projects of this stature make the need for a flexible workforce greater then ever.”