Freelancers Fighting for Pay
As an advisor for healthcare businesses helping them attract more customers, Carolina Salas carried out work for a dental practice at a discounted price as she was working with an acquaintance, but this ended up with her having to take the client to court for non-payment. The twice-delayed court case has cost Ms Salas $1,500 in legal fees, with over 60 hours of lost work to recover the payment, worth just $3,500.
“It wasn’t until I went to the court that I realised how powerless I was,” Ms Salas says. “The process of the court disempowered me even more. I became invisible.”
Ms Salas now turns to the city government when she has a payment crisis. On May 15, 2017, New York became the first US city to enact a law giving freelancers the right to a written contract, timely and full payment and protection from retaliation. The “Freelance Isn’t Free Law” penalises any violations to these rights, which includes damages payments and legal fees, which are enforced by the authorities.
The New York City Department of Consumer Affairs is in charge of enforcing the act. The commissioner, Lorelei Salas, says: “It doesn’t require a lot of staffing. The cases move quickly and the incentives are actually big because companies lose more if they don’t comply to begin with. It didn’t require a big investment.”
Since 2017, the city government have received 760 complaints, recovered almost $1m in payments and over 60 per cent of cases have been resolved in 90 days or less.
Commissioner Salas feels that the city governments are best positioned to respond to the changing nature of work: “A lot of state and federal laws have been in place for decades and they don’t always reflect the current economy and the industries we’re seeing emerge,” she says.
“That’s why we’re seeing cities react to the current economy whereas for the federal government that would take longer — and also, it may not be this administration that will resolve these issues.”
Breaking into journalism
Changes in attitudes towards freelancers came about when an alliance of businesses in New York realised the financial benefits of defending the economic security of freelancers. WeWork, Kickstarter and the Brooklyn Chamber of Commerce are all behind the cause.
A petition demanding timely payment for freelance journalists began in February of this year and now has over 1,000 signatures.
The Freelancer Club, a members’ club for creative freelancers, is also calling for change including contracts for work worth £250 or more, a standardised procedure for freelancers to lodge complaints with local governments, legal assistance and the right for freelancers to sue in court for double the unpaid amount.
Matt Dowling, who started the #nofreework campaign in 2016, says the Freelancer Club is working to build relationships with businesses and members of parliament in order to start lobbying for policy changes. “We know there is goodwill on their side to do something about this,” he says. “It’s just driving it to the top of the agenda so we can translate words into action.”
HMRC scam emails being sent over Tax battle outrage
Fake HMRC emails have been sent to MPs attacking the chancellor over the £2.5 billion freelance tax battle.
The tax scandal involving 50,000 contractors, owing an average of £50,000 each in national insurance and income tax, caused so much outrage that someone cloned one of HMRC’s email addresses and sent fake messages to MPs, calling out Philip Hammond, the chancellor, and Mel Stride, the Treasury minister, as liars.
The email that was sent out in January, says the loan charge is “about to financially cripple up to 100,000 people.”
“HMRC had 20 years in which to act. They did nothing. Do not fall for their lies. Do not fall for Mel Stride’s lies. Do not fall for Philip Hammond’s lies. There will be people in your constituency affected by the loan charge.”
Freelancers say that the intense money pressures have caused their marriages to end, they have suffered nervous breakdowns and it has also inflicted depression.
A cross-party group of MPs have written to Sir Jonathan Thompson, HMRC’s chief executive, asking for “urgent” clarification after receiving the news that six people being chased by the taxman had killed themselves.
Sir Jonathan replied: “Despite both direct approaches to individuals, and repeated requests to the Loan Charge Action Group, no information has been provided that has enabled us to identify an individual that we can link to both taking their own life and the loan charge. We refute any suggestion that we have failed to act in the appropriate manner.”
David Heath, a management consultant, was paid in non-refundable loans between 2010 and 2013.
“At no time did HMRC say to me, ‘We don’t agree with these schemes’.” He even says that he put the details in his tax return forms and received no queries from HMRC.
After contracting Lyme disease, Mr Heath, 56, had to reduce his workload and now earns only £12,000 a year. His unpaid tax bill has amounted to £346,000 over five years. He has offered to pay £5,000 every year for 14 years but there has been no reply from the taxman as of yet.
“I have no doubt that this is affecting my health and that of my family,” he said. “I was sent to A&E by my GP last week . . . I am having problems moving my arms properly. I am sure it is as a result of the massive stress.”
27% of freelancers know nothing about digital tax changes
According to research by IPSE one in four (27%) self-employed people “know nothing” about having to switch to new VAT rules earlier this week for the government’s Making Tax Digital scheme.
From 1 April, when the new Making Tax Digital (MTD) rules came into force, VAT-registered companies will have to keep digital VAT records and submit electronic quarterly returns through paid-for software.
The move to digital for VAT is just the first part of a wider programme of MTD reforms, which will change the way all businesses, including the self-employed, account and pay tax. This is intended to simplify the tax process, both for taxpayers and HMRC. The self-assessment process will be replaced by more frequent, digital updates that will report directly to HMRC through compatible software.
Pregnancy penalty means pension loss for Mothers
A rise in entrepreneurial mothers turning freelance is becoming an ever more popular solution to balancing work and family life. However, this comes with a “pregnancy penalty” of almost 300pc, meaning a potential loss of £247,000 when they come to retirement, as they invest this money into their family rather than their savings.
Blow for Addison Lee means blow-out for Freelance workers
Addison Lee was denied the opportunity to challenge a ruling for its London couriers to enjoy basic employment rights like holiday pay by The Court of Appeal.
Therefore, Addison Lee will have to respect the decision that was made by the Employment Appeals Tribunal last year as being the final say on the matter, for now anyway. The tribunal ruled in favour of courier Paul Gascoigne, and said that couriers should be allowed to claim some back-pay for holiday entitlement and pensions.
The amount that the company’s 500 couriers could claim back has not yet been confirmed.
‘Flat white’ sector is lifting the economy
According to research digital and creative businesses, in particular those in the “Silicon Roundabout” in east London, are overtaking industry as the largest driver of UK economic output.
Douglas McWilliams, deputy chairman at the Centre for Economics and Business Research (CEBR) says that the term “flat white economy” was inspired by the tongue-in-cheek reality that “expensive property forces millennials to live in coffee houses”.
Mr McWilliams, who was a chief economist at IBM UK, said: “One of the most important parts of the sector is the digital marketing that results from the UK’s remarkably high share of online consumers’ and other expenditure.”
The flat white sector is likely to spread across the UK because of the very reason they got their name in the first place. The high costs of operating in London will help to grow the sector in different parts of the UK, as people get driven out in part by property costs.
Rent control suggested for Hackney Wick to protect creative industries
Rent controls are to be imposed on properties in the Hackney Wick area to protect creative businesses after rent in Hackney increased 50% in the last year.
The initiative has the support from the Mayor of London, Sadiq Khan, and will force landowners in the area to set rents at less than half of the current market rate.
Councillor Guy Nicholson, Hackney’s cabinet member for planning said: “While we can’t control all the changes happening in Hackney Wick, we’re determined to bridge the gap between an exciting new economy and residents and businesses who have told us they feel at risk of being left behind by redevelopment. It is important for us to preserve this inspiring and unique corner of the borough.”
More than 8,400 square metres of existing low-cost work will be re-provided under the new planning rules, alongside hundreds of new homes, modern retail, and community facilities. The rent controls follow the creation of the masterplan for the regeneration of the area.