A freedom of information (FoI) request by the Unite trades union revealed that 1,206,000 construction workers were paid via the Construction Industry Scheme (CIS) during the 2022/23 tax year.
This was a 15% increase on the 1,047,000 who were paid via the scheme in 2021/22, which was itself up 7.5% on the previous year.
The Construction Industry Scheme (CIS) is a way for self-employed workers in the construction industry to pay tax as they earn. Critics says that it is a way from employers to avoid PAYE and dodge employment responsibilities and liabilities.
The big advantage for employers is having their workers on CIS – and thus officially self-employed – means they are not required to pay employers’ national insurance contributions of 13.8%.
According to the Unite union, many workers operating under CIS are not really self-employed at all and should be treated as direct employees, with employment rights. Being treated as self-employed means that they can be fired with no notice and do not receive holiday or sick pay.
Unite general secretary Sharon Graham said: “The huge growth in CIS working is bad news for workers. Increasing numbers are operating via a bogus self-employment relationship, resulting in them being stripped of their rights and can be sacked without warning. Meanwhile, employers are laughing all the way to the bank, they don’t have to pay national insurance contributions, nor holiday and sick pay to workers.”
Unite says that the rise of CIS affects safety, training and productivity across the industry, as a direct result of constantly engaging and then dismissing workers once a particular job has been completed.
The 24% increase in CIS workers in two years – from 974,000 to 1.2 million – raises questions about whether the HMRC is enforcing its rules on who can and cannot be paid via CIS, Unite said. It reckons that the Treasury is losing billions of pounds in unpaid national insurance.
Unite national officer Jerry Swain said: “These figures are alarming. The increase in CIS workers is not reflective of any increase in employment in the industry. Employment status is not a matter of choice and employers should not be offering workers incentives to be self-employed, when they are really employees. The question needs to be asked – what is HMRC is doing, if anything, to tackle this problem?”