Resolution Foundation: Self-employed should be entitled to minimum wage

Thursday 6 July 2017

Some self-employed professionals should be eligible for the national minimum wage because of their low earnings, according to the Resolution Foundation. 

The thinktank believes around half of the 4.8 million people categorised as self-employed earn £310 or less a week and, because they do not set their own wages, should be deemed to be workers and benefit from the same protection.

The Resolution Foundation has submitted the concept to the Taylor Review to be considered as a method for improving conditions for freelancers and contractors. 

Conor D'Arcy of the Resolution Foundation, said: "While many [of the self-employed] are higher earners who benefit from significant flexibility, around half fall below the low pay earnings threshold of just £310 a week.

“The government can start by extending minimum wage protections to those self-employed people whose prices are set by a firm.”

Mr D’Arcy went on to say that the move would mean self-employed people in the gig economy could benefit from protection against extreme low pay for the first time ever.

At the moment, 21-24 year-olds are entitled to £7.05 per hour, while 18-20 year-olds and 16-17 year-olds have a rate of £5.60 and £4.05 respectively. Those over 25 are entitled to the National Living Wage of £7.50 an hour.

The Resolution Foundation believes self-employed staff should be categorised by whether they set the price for their work or their employer does. 

Recommendations by the group include extending maternity pay and statutory paternity pay. These moves would cost £82 million and £18 million respectively. 

As well as this, it wants to extend the contributory Jobseekers Allowance for those who have paid Class 4 NICs at a profit level of £25,000. This would cost roughly £50 million.

Another proposal is to reopen plans to equalise NICs up to the 12 per cent rate paid by employees, which would save £1 billion and extend employer NICs to price-setting firms that hire self-employed contractors.

The Resolution Foundation is also planning to reduce the tax advantages associated with self-incorporation by reducing Entrepreneur's Relief and the Annual Exempt Amount, which collectively cost £6 billion. 

In order to make sure their finances are being handled properly, independent professionals should look to use freelancer and contractor accountants.

These specialists have extensive knowledge of working with people who run their own company and can help to ensure they make the most of their business opportunities. 

By Victoria McDonnell

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