As part of The Entrepreneurial Audit (a joint project from the RSA and Crunch) 20 policy ideas have been proposed to strengthen self-employment in the UK. We’ve recently covered the RSA’s recommendation from the report that suggested a levelling out of working benefits for self-employed people could be funded by an increase in National Insurance tax.
Another proposal from the report delves deeper into ways to address the dips in income that workers face when illness or injury strikes. Currently, Statutory Sick Pay is a right exclusively enjoyed by employees, resulting in many self-employed people falling back onto the taxpayer-funded Employment Support Allowance instead.
This benefit becomes means-tested after a year, and comes with a somewhat unhelpful requirement to take part in training and attend job interviews if you are deemed partially fit for work.
Fixing the problem
In the absence of appropriate help from the state, 9% of the self-employed buy income protection insurance to maintain their incomes for long periods should they fall ill, but clearly not everybody considers this an affordable option. The report suggests pooling the risk among the self-employed and creating a collective income protection insurance scheme, in the same mould as NEST (the workplace pension scheme set up by the Government).
The report also urges the Government to open up all elements of the new ‘Fit to Work’ service to the self-employed. This provides informed guidance online and over the phone about how to manage health problems or deal with stress, as well as an assessment service with a trained healthcare professional, resulting in a detailed Return to Work Plan.
While the self-employed are able to access the advice line, they are currently excluded from the more comprehensive assessment. Allowing the self-employed access to a service that helps get them back into work could be a straightforward fix to implement.
It’s notable that in the US, the Freelancers Union has grown significantly, specifically around their offer of health insurance for freelancers. Of course in the UK the self-employed have access to the NHS, like everyone else. But that doesn’t deal with the loss of income and opportunity that ill-health poses the self-employed, so more can (and should) be done to help those seeing their income at risk through no fault of their own.
“We are still humans who need to recover, and shouldn’t have to worry about finances and work situation, especially when someone has a serious illness and needs genuine recovery time. It isn’t right.”
The scale of the issue is not one that should be taken lightly. The Department for Business, Energy & Industrial Strategy (BEIS) found that over 80% of self-employed respondents said they would try not to take time off work should they become sick or injured, while 15% said they had no access to any support, be it savings or a spouse’s extra income.
Are the RSA’s suggestions a step in the right direction for gaining sickness pay for freelancers, contractors, and small business owners? Do you have any suggestions of your own?
Use our Take-Home Pay Calculator to work out your true earnings and see if you could save money with a different company set up.
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