Ucatt has called for a Government probe into payroll companies which it blames for bogus self-employment across the industry.

But the Recruitment and Employment Confederation believes self-employment is vital to provide a flexible work force for contractors.

Kevin Green, the REC’s Chief Executive said: “We are committed to working effectively with the Government to address examples of bogus self-employment.

“However, it is also critical for the UK economy that we promote legitimate self-employment.

“If we want to retain a dynamic construction industry in the UK we need to retain its use of a skilled and flexible workforce. Payroll companies help the self employed particularly with the administration of pay. Together with the review of iR35, we urge the Government to look into this whole area as part of their commitment to help small businesses and entrepreneurs.”

Simon Noakes, Chair of REC Construction said: “Recruitment agencies specialising in construction within the REC work hard to raise standards and to provide a first class service to employers and contractors. We fully support the effective enforcement of existing regulations.

“It is important to note that the vast majority of self-employed workers in construction choose to work in this way.

“The idea that contractors are somehow coerced into bogus self employment is wide of the mark. It is also important to recognise that construction businesses need a flexible workforce, especially as the market remains volatile with profits on projects being reduced

“Companies need to know that competent, self employed professionals are out there to meet short term increases in demand, while at the same time controlling fixed costs.

“The added value provided by specialist recruitment agencies gives construction companies at all sizes the confidence to tender for large scale projects.

“With landmark projects such as the Olympic Games in and Westfield shopping centre, there are currently over 5000 construction operatives working in Stratford alone. Projects of this stature make the need for a flexible workforce greater then ever.”