Ross Clark

The real scandal of zero-hours contracts: HMRC’s greed

The real scandal of zero-hours contracts: HMRC's greed
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Cue the Guardian headlines of ‘exploitation’ in ‘Dickensian’ Britain. Nearly 700,000 people are now working on zero-hours contracts, a rise of 100,000 in just one year.

Is that really such a problem? Not among the many people who want flexible work because they want to fit the business of earning money around studying, travelling or other careers. I agree that employers using zero hours contracts should not be allowed to place exclusivity clauses in them, preventing people working elsewhere – and which the government has already said it will ban. But most zero hours contracts do not state this – they offer two-way flexibility, with the employer not obliged to offer employment and employee not obliged to work. Most of the young actors I know depend on such work so that they can fit it around rehearsals and performances.

The real scandal is not that employers are hiring workers in a flexible way but that HMRC is determined to label such workers as employees, so that they can squeeze more tax out of them. If you are selling your labour to one or more employers on an irregular basis you should be treated as self-employed. You should be paid pre-tax for the work which you do, and it be your responsibility to pay the tax. That is how it used to work for all sorts of casual workers, and how it does still work for some. It would be ridiculous, for example, for users of taxis to be expected to pay the driver through PAYE, even if they use the same taxi driver regularly.

But of course the self-employed pay lower national insurance contributions (in recognition that they don’t qualify for statutory sick pay and other benefits), and HMRC doesn’t like that. For the past two decade or more it has waged a war to try to force as many people as it possibly can onto PAYE, so it can extract more money from them.

The growth of zero hours is not a case of Dickensian employers exploiting the poor but a greedy HMRC bearing down on them.