Sick pay is the most valued benefit for self-employed

Freelancers and self-employed workers prefer sick pay as a valuable statutory pay benefit

03 July 2017
Kimberley Dondo

Most workers in full-time employment never have to worry about receiving remuneration if they fall ill - however for freelancers and micro business owners this is a source of financial stress. According to new research by FreeAgent and The Freelancer & Contractor Services Association (FCSA), sole traders rated sickness provisions 8.7 out of 10 when asked which statutory benefits they would most value.

The survey found that 76% of respondents did not have any method of covering sick pay, maternity/ paternity leave, holiday or redundancy, this means that across the UK’s 5.2 million micro-business sectors, millions of workers are working without the basic benefits packages provided to employed workers.

Ed Molyneux, CEO and co-founder of FreeAgent, comments: “The UK Government seems determined to ‘level the playing field’ between self-employed and employed workers, but this is actually very unfair on people who run very small businesses, as it does not take into account the huge amount of personal risk that is associated with being self-employed.”

“Ideally, the UK’s millions of freelancers and micro-business owners should be able to enjoy the same statutory entitlements as their employed counterparts - especially if they will be expected to pay the same level of tax. I therefore hope that the forthcoming Taylor review will be looking closely into this issue, and that the report will make suitable recommendations for how to address the current inequality that exists between employed and self-employed workers.”

Notably, the survey also found that more than a third (35%) of the respondents did not have any retirement funds in place and a further 22% would choose to opt out of auto-enrolment. The decision to opt out seems to predominantly rely on the person’s financial status, as a third of limited companies (32%) would choose to opt out compared to just 12% of sole traders who would opt out of auto-enrolment. It comes as no surprise that in the survey auto-enrolment was the least favoured benefit for limited company workers who rated it at 5.5 out 10 while sole traders valued auto-enrolment at 7.3 out of 10.

The results of this survey were released ahead of the publication of the Taylor Review which will examine how employment practices need to change in order to create provisions for modern business models, which includes generating the rights of self-employed and gig-economy workers.

Julia Kermode, FCSA’s chief executive added: “We know from recent high-profile media cases where self-employed drivers and couriers have sought “worker” status and accompanying rights, as in the Uber tribunal, that rights will undoubtedly be a focus of the Taylor Review. “

“For many people who work for themselves, self-employment is a career choice and those who choose it know that this way of working does not come with statutory benefits.  However, it is clear from our research that many have not made appropriate provisions to cover benefits that employees receive. I hope that our evidence helps to inform policy decisions, particularly if the Government intends to increase tax or NICs for self-employed people – as there must be something offered in exchange for increasing the financial burden of the self-employed.  Not all self-employed workers want the same things so there is no one-size fits all solution, in particular those working through their own limited companies are more likely to already have provision for welfare benefits. The Government should find a way of offering additional benefits specifically to those people who want and need them.”   


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