MPs move to limit gig economy

Ivan Schwartz
November 22, 2017

Two MPs released a report on Monday, urging the government to protect employees in the gig economy.

The work and pensions select committee and the business, energy and industrial strategy (BEIS) committee have prepared draft legislation meant to close the loopholes that allow "irresponsible companies to underpay workers".

The bill said the law around the gig economy should be tightened to stop companies using false self-employment status for "cheap labour and tax avoidance", to prevent the law being used to facilitate workers' exploitation for competitive advantage.

"The Bill would put good business on a level playing field, not being undercut by bad business. It is time to close the loopholes that allow irresponsible companies to underpay workers, avoid taxes and free ride on our welfare system", Field said.

Business, energy and industrial strategy committee chair, Rachel Reeves, said: "Responsible businesses deserve a level-playing field to compete, not a system which rewards unscrupulous businesses".

Deliveroo is a key employer in the gig economy.

The new proposals come after a government-commissioned review carried out by Matthew Taylor earlier this year put forward its own recommendations for reforming labour laws.

According to its proposals, workers should not be faced with a choice between not working, or working for below minimum wage.

The MPs want the government to implement a "worker by default" model putting the onus on companies to demonstrate the self-employed status of those working for them.

Former Uber drivers James Farrar and Yaseen Aslam address the media as they leave the Employment Appeals Tribunal
Former Uber drivers James Farrar and Yaseen Aslam address the media as they leave the Employment Appeals Tribunal

Clearer statutory definitions of employment status: "This legislation should emphasise the importance of control and supervision of workers by a company, rather than a narrow focus on substitution, in distinguishing between workers and the genuine self-employed".

The GMB union also said it was disappointed.

Whilst the report is considered to be going in the right direction, unions fear there is still a long way to go. "However, the fact remains that without real investment in HMRC and a political will to get tough on rogue employers who are cheating the British taxpayer out of millions and reaping profits out of worker exploitation, then there will be no significant change", he said.

But the CBI, which represents employers, said the plans would take away the flexibility companies need to "grow and create jobs".

MPs have put forward plans to close numerous loopholes in the law that have allowed the gig economy to flourish.

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In a joint report, they call for legislation to define employment status and action to end the practice of agency workers being paid less than permanent staff doing the same job.

The Business Department said the government would "respond in due course", while pointing out there are "record numbers of people in work thanks to our flexible labour market, benefitting both workers and business".

However, Sarah Ozanne, an employment lawyer with law firm CMS, commented: "The proposed "worker by default" regime places the burden on businesses and risks reformulating the existing quagmire of what is genuine self-employment".

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