The accident at work risk
12/02/2009

another reason not take cash-in-hand employment

As the credit crunch tightens, financial pressures become greater for those most vulnerable and an increasing number of workers in the UK find themselves squeezed out of the secure job market. As a result, many will find themselves considering the kind of employment that only a few years ago they would not even have entertained; "downgrading" a career can be a very sobering business indeed.

During such times there is often a growth in cash-in-hand work. The scale of this "hidden economy" is, by definition, very difficult to ascertain. However, HM Revenue and Customs (HMRC), believe that around 2 million people in the UK undertake some form of cash-in-hand work each year, costing the UK an astonishing £2 billion in lost taxes.

Whatever the arguments about the supposed immorality of failing to pay taxes - some claim that they will not, on principle, pay for things they do not agree with, e.g. the war in Iraq - and contribute to basic national services such as the policing and health, working a cash-in-hand job can have devastating consequences in the event that someone engaged in this form of illegal employment suffers an accident at work.

While it is not impossible to make an accident at work claim against an employer in this situation, doing so can be fraught with difficulty. For a start, without a complete paper trail documenting a worker's employment, it can be a real task even proving that the claimant was ever in employment and, consequently, difficult to apportion liability.

And, without an employer having the correct liability insurance, it can sometimes be impossible to secure a level of compensation appropriate to any injuries suffered by the claimant during a cash-in-hand accident at work. In such a situation, there is little that even the best no win, no fee lawyer can do; whatever his or her level of legal expertise he or she will not be a magician who can conjure a settlement out of thin air.

There are other drawbacks, including the fact such workers rake in no money to contribute to their pensions. Yet, despite this, the appeal of immediate cash and very low detection rates means many choose the cash-in-hand option.

Conservative MP Edward Leigh, who headed a committee looking into the issue, comments, "HMRC is apparently making little ground in its efforts to diminish the cash-in-hand culture operating in the UK.

"HMRC has no solid estimate of the level of losses but it might be over £2bn a year. With a detection rate of only 1.5%, the chances of being caught are very slight.

"For those who are caught, the penalties imposed are usually relatively trifling - on average only 3% of the tax detected. And in very few cases - just two out of 1,000 - is a prosecution launched."

Perhaps a full and proper consideration of the accident at work risk of cash-in-hand employment would help provide some added deterrent - it is clearly needed.

Can I claim?