The loophole allows employers to register their workers through fake payroll companies known as ‘umbrella payroll companies’. This allows the employer to avoid paying employers’ national insurance contributions, which must instead be paid by the worker themselves.
Employees are also hit with additional fees that can add up to more than £100 a week, cutting their take home pay by as much as a quarter.
The Government reformed employment law in April, but failed to close this loophole. As a result thousands more workers have now found themselves losing out. At Treasury Questions Emma demanded the Government close the loophole immediately.
Emma asked the Financial Secretary David Gauke MP:
“Since the Government updated the law in April thousands of construction workers like my constituent Ron Boyle are facing a new form of exploitation. Forced to register with sham umbrella payroll companies, they lose hundreds of pounds a month in bogus fees, and paying National Insurance contributions which ought to be the responsibility of their employers. Can the Minister assure me that this loophole will be quickly closed so that workers like Mr Boyle are not conned out of a fair wage?”
Mr Gauke said that he was “sympathetic” to the problems workers were experiencing, but did not pledge any action. You can read the official record of Emma’s question and the Minister’s response by clicking here.
This is not the first time the Government has tried to avoid this important issue. Earlier this year Emma asked the Leader of the House of Commons William Hague MP for a debate on the subject, but a debate was not granted.
Speaking after Treasury Questions, Emma said:
“The Government’s complacency on this issue is shocking. Thousands of people like Mr Boyle are being exploited by their employer, but the Government will not stand up for them. Ministers were warned about this loophole when the law was updated, but they didn’t act then and now working people are paying the price. The Government needs to admit its mistake and close this loophole now.
“The Minister’s refusal to act shows that this Tory-led government can’t be trusted to stand up for working people. Since David Cameron entered Downing Street we’ve seen falling wages and greater insecurity at work. We need a Labour government that will make work pay and defend workers from exploitation.”