UK Poverty Post

Why Oxfam joined the Fair Work Coalition

Get a job and you’re on the route out of poverty – that’s what the government will tell you. After all, ‘paid work is the route to independence, health and well-being for most people’. Surely if everyone had a job that would be it: poverty solved. Sadly, that simply isn’t the case. The number of people in in-work poverty has overtaken out-of-work poverty; this much we know. So why do people who are able to get jobs remain in poverty?

Well, one of the key causes of in-work poverty is a lack of access to labour rights. Labour rights seek to ensure that employers are prevented from exploiting workers and instead must meet certain standards of employment. The most obvious example of such a right is the National Minimum Wage, £5.80 an hour for those aged 22 and older. But there are other important rights that we often take for granted: protection from unfair dismissal, written terms and conditions, and redundancy pay. Doesn’t everyone who works have the same rights?

In a word: no. There are three employment statuses: ‘employee’, ‘worker’ and ‘self-employed’. As an ‘employee’, you have access to all rights available. A ‘worker’ – typically an agency worker – has core rights but no right to a written statement of employment terms, statutory notice, or protection from unfair dismissal. Someone who is ‘self-employed’ has no rights and is expected to negotiate their terms with their business partner – but, increasingly, workers are being falsely ‘self-employed’ and have no control over the terms, which are dictated by their employer.

The benefits to the employers are obvious: reduce the risk (and often cost) of taking on labour. However, the consequence of having one employment status over another is significant, and especially for poorer people. Indeed, it’s estimated that there are 500,000 low-paid workers who are denied their full employment rights – either being a ‘worker’ or falsely ‘self-employed’.

The reality for these workers blows the myth that any work is a sure-fire route out of poverty. Instead, their employment status means that they could lose their income at a moment’s notice and end up in a low pay-no pay cycle – with no hope of that cycle ever ending. Unscrupulous employers will also seek to classify their workers as ‘self-employed’, despite the worker having no power to negotiate their terms and conditions. Such falsely self-employed workers are not entitled to the National Minimum Wage and can be seen in hotels, where sub-contracted agency workers are paid a mere £2 per hour.

Can’t such workers claim their rights through an Employment Tribunal? The short answer is yes. However, working out your employment status is no easy task and, as Directgov will tell you, ‘just because you have a contract that describes you as an “employee” or as “self-employed” does not mean that it is the case.’ The reality is that if you are living in poverty, taking on the stress and cost involved in claiming your rights and proving your true employment status is simply not an option.

Such conditions permanently scar workers and their dependants, and serve to perpetuate poverty in the UK. In February the Joseph Rowntree Foundation said that the way employers treat their employees plays “an important role in the low-pay, no-pay cycle” and called on public sector bodies to use their purchasing power to favour companies that offered greater job security, adding that entering work could not provide a sustainable route out of poverty “if job security, low pay and lack of progression [once in work] are not also addressed”.

What can be done? Oxfam has previously called for a review of the employment status regime. We know that there are structural causes of poverty that make it difficult for those who live below the poverty line to ever make it above. We are not alone. We’ve joined the Fair Work coalition, which was launched earlier this month and includes a wide range of organisations, including faith groups and community organisations, which will be campaigning for a change to the current employment status regime. We call for all workers to have the same range of statutory employment rights to remove the confusion over who qualifies for which rights, and ensure that work can be a route out of poverty.