Leyton and Wanstead MP John Cryer chaired a debate in Westminster last week on “disreputable” firms avoiding duties to workers by using payroll companies.
Mr Cryer said “blurring” the line between employment and self-employment meant companies can avoid needing to pay national insurance, holiday pay, redundancy pay and other rights.
Some payroll companies are allegedly being used to manage workforce pay, particularly in the construction trade.
Mr Cryer said: “It is a perverse situation the way in which construction workers – after signing a self-employed contract with a payroll company – don’t in theory have any formal relationship with their employer, while in reality that building firm still issues directions and engages with the workforce.”
He urged the government to launch a full inquiry into the practice.
Steve Murphy, general secretary of the Union of Construction, Allied Trades and Technicians, said: “It is vitally important that MPs and ministers understand the murky affairs of the construction industry, which blight the lives of hundreds and thousands of construction workers.”
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