Pay self-employed workers the national minimum wage, says thinktank

Certain self-employed workers should be paid the minimum wage, according to recommendations by the Resolution Foundation.

The thinktank has submitted the idea to Matthew Taylor’s review of modern working practices, claiming that about half of the 4.8 million people classified as self-employed earn less than £310 a week.

It suggests that in cases where self-employed workers’ pay is set by a business, those workers should have the same minimum wage protections as employed staff.

This would affect a significant number of “gig economy” employers, including those who accept work via technology platforms but have little control over the fees they can charge, such as Uber drivers or Deliveroo workers.

Conor D’Arcy, a policy analyst at the Resolution Foundation, said: “While a minimum wage would not be appropriate for the majority of the self-employed, for those who take work from firms or platforms and – crucially – don’t have control over the price they charge, moves to reduce exploitatively low pay for this group would be both meaningful and welcome.”

The Resolution Foundation also points to the fact that existing minimum wage legislation for those who do piecework offers a “useful template”, by requiring organisations to complete a test to ensure that a person working at an average pace could be expected to earn at least the minimum wage while carrying out the task.

Its report The minimum required? Minimum wages and the self-employed makes a number of other recommendations to the Taylor review supporting self-employed workers.

Key among these is a proposal to require companies that take on self-employed contractors and set their fees to pay national insurance contributions, “possibly through a new levy”.

Other recommendations include:

• extending statutory maternity and paternity pay to the self-employed, which would cost up to £82 million for maternity and up to £18 million for paternity;
• extending contributory jobseekers’ allowance to those who have paid Class 4 National Insurance Contributions (NICs) at a profit level of £25,000 for two years (cost of up to £50 million);
• equalising NICs for self-employed workers up to the 12% rate that employees pay, saving £1bn; and
• reducing the tax advantages associated with self-incorporation by scaling back Entrepreneurs’ Relief and the Annual Exempt Amount, which together cost £6 billion.

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Taylor, chief executive of the Royal Society of the Arts, recently hinted that his review would be published within a “few weeks”.

Meanwhile, the Low Pay Commission consultation on the national minimum wage and the national living wage closes this Friday, 7 July.