Contractors value sick pay above all other benefits.

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Freelancers and contractors consider sick pay as the most valuable statutory pay benefit, research from The FCSA and FreeAgent has revealed.

900 UK freelancers and micro-businesses highlighted that sick pay provision is the benefit they would most welcome, over maternity pay, job seekers allowance and pension auto-enrolment.

Interestingly, a business owner’s desire for employee-like benefits varies depending on company structure. Sole traders are more likely to value benefits, and rate sickness provision as 8.7 out of 10 in importance, while limited company owners rate this as 6.4 out of 10.

The research also highlighted that 76% of freelancers currently do not have any way of providing sick pay, maternity or paternity pay, holiday or redundancy pay in their business – suggesting that on a national scale, millions of self-employed people are working without basic entitlements which employees receive. 

Previous findings from FreeAgent showed that as many as 80% of freelancers and contractors were happy to work without employee rights and benefits. However, this was long-before the Government launched what many consider as an attack on the self-employed, which has included the slashing of tax-free dividend allowance and controversial IR35 reform, as they attempt to balance the tax system.

Unsurprisingly, many feel as though the benefits of working this way are now being reduced. This was highlighted by 95% of Qdos Contractor's client, who believe the Government is gradually reducing the advantages of working independently. Put simply, this is disconcerting, as Ed Molyneux, FreeAgent CEO explained.

“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. The Government needs to acknowledge the tremendous financial risks associated with starting and running your own business and bear this in mind when deciding on its future tax policies.”

In addition to freelancer’s and contractor’s concerning lack of financial security should they fall ill, go on holiday or take maternity or paternity leave, 35% do not have any plans in place to fund their retirement.

Matthew Taylor’s recent ‘Review into Modern Working Practices’, included a recommendation for ‘gig economy’ workers to start receiving employment rights. On the face of it, this was widely welcomed. But for it to work, IPSE has argued that first the Government must spend time carefully defining what constitutes as self-employed. Currently, the lines between a freelancer, contractor, ‘dependent contractor’ or ‘gig economy’ worker remain blurred.

Julia Kermode, FCSA’s chief executive also put forward the case for Government to consider shaping policy to meet the evolving needs of the self-employed.

“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.”  

Which statutory benefits would matter most to you? Join the conversation…

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