The Fissured Worker: Personal Service Companies and Employment Rights

Abstract

A personal service company (PSC) is a form of intermediary with separate legal personality used as a vehicle to provide the labour of the individual who controls the PSC. The rapid growth of PSCs in recent years, and their potential to disguise employment status for tax purposes, have been the subject of much policy and legislation. But their detrimental effect on the employment rights, both individual and collective, has almost been ignored. Evidence shows that PSCs continue to increase at a faster rate than employment, are colonising sectors of the labour market characterised by dependent labour and are often imposed to avoid the duties owed to workers or employees. In this article, I analyse how the existing law might provide a means of protecting the labour rights of individuals who are engaged via PSCs, examining the statutory provisions specific to some legal rights and more general doctrines based on shams, labels and piercing the corporate veil. Although the law provides some protection in some circumstances, PSCs retain their allure as a means of avoiding employment rights. I discuss potential legislative solutions to this problem, which highlights the interaction of tax and employment law and the difficulties caused by relying on the bilateral contract as the keystone of labour rights.