MPs vow to tackle bogus self-employment

The recommendation was made as part of an expansive report – Impact of the closure of City Link on Employment – recently released by MPs.

MPs accepted that City Link employees, although nominally self-employed, were effectively directly employed.

City Link collapsed into administration suddenly on Christmas 2104. Better Capital, owner of the failed courier City Link, sought to recover half of its £40m investment in the company.

MPs said: “We reiterate the call in Zero hours contracts in Scotland: Interim Report for the Government to set out what steps it is taking to prevent workers from being pushed into bogus self-employment.”

MPs added: “We are dismayed that, although it was clear for some time there were serious questions over the ability of City Link to continue trading after December 2014, small businesses and self-employed drivers working for City Link were encouraged to take on additional costs despite a strong possibility that they would not receive payment for a significant part of their work in December.

“The additional work undertaken by these people has left some of them in serious financial difficulties, with some small firms forced into administration themselves or relying on goodwill from their own creditors to struggle on. Again, there is no doubt that contractors were deliberately deceived as to the true state of the business. City Link and Better Capital are morally, if not legally, responsible for the difficulties that many of these individuals and small business now find themselves in.”

MPs accepted there will always be those who lose out when a company goes into administration and cannot cover all of its debts. They did not agree the current system, where those who have given secure credit to a company are cushioned from the full impact of an insolvency because of the losses borne by those who work for a company on a self-employed basis, or as contractors or suppliers, represents the appropriate balance.

MPs concluded: “The example of City Link has made an overwhelming case that improvements should be made to current practices and the legislative framework to help protect the rights of workers, allow for better communication to those affected and to safeguard the taxpayers’ interest.”

RMT General Secretary Mick Cash said: “The City Link scandal shocked and outraged the nation and this independent  cross-party report endorses our view that Better Capital and City Link deliberately deceived their employees and Better Capital put their interests before those of saving City Link or the workforce.

“Piling scandal on top of scandal the report says the law on consulting with employees was deliberately broken with a high human cost. This allowed the bandit capitalists to cut and run while workers lives were ruined and the taxpayers were left to pick up the pieces.

“RMT welcomes the MPs recommendation that there is an overwhelming case for reform to protect workers in the future and calls on the government to act swiftly on the recommendations.

“The next stage in the RMT’S campaign for justice for City Link workers is the administrators report to the government into conduct of City Links directors. We are demanding that results in a full and forensic examination of the facts by ministers which leaves no stone left unturned. It is the very least City Link workers deserve.” 

You can read the full report here