The Gig Economy & Self Employment

The gig economy has been a controversial issue for a while now, with politicians, employers and employees scrambling to get their heads around precisely how it works, and looking to exploit its loopholes. However, this might be coming to an end if a new bill passes…

Coming from the Work and Pensions and Business, Energy and Industrial Strategy Committees, a report and draft bill has been produced which focuses on closing these loopholes. This comes on the back of this year’s Taylor report on modern work practices, as well as high profile cases against the likes of Uber and Deliveroo.

The Bill itself suggests that those employed in the gig economy should get a default ‘worker’ status, and that businesses that falsely classify workers as self-employed should be fined. This bogus status is often used by high profile companies to aid in tax avoidance and reduce their wage bills.

Rt Hon Frank Field MP, Chair of the Work and Pensions Committee, said:

“The two Committees are today presenting the Prime Minister with an opportunity to fulfil the promise she made on the steps of Downing Street on her first day in office, with a draft Bill that would end the mass exploitation of ordinary, hard-working people in the gig economy.

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.”

Tougher Enforcement of Workers’ Rights

The committee has suggested that the focus be on protecting workers’ rights and being tough on companies that, in the past, would be able to sidestep the law. Rachel Reeves MP, Chair of the Business, Energy and Industrial Strategy Committee, said:

“Uber, Deliveroo and others like to bang the drum for the benefits of flexibility for their workforce but currently all the burden of this flexibility is picked up by taxpayers and workers. This must change.

We say that companies should pay higher wages when they are asking people to work extra hours or on zero-hours contracts.

Recent cases demonstrate a need for greater clarity in the law to protect workers. Responsible businesses deserve a level-playing field to compete, not a system which rewards unscrupulous businesses.

We need new laws but also much tougher enforcement, to weed out those businesses seeking to exploit complex labour laws, and workers, for their competitive advantage.”

As it stands, an unacceptable burden is placed on the worker to address poor work conditions through expensive and risky court cases, whilst companies can operate with relative impunity. The introduction of class action cases in disputes over wages, status and working time could help mitigate this burden.

New legislation also needs to take into consideration the legitimately self-employed, and require that companies provide basic safety net standards and benefits for their workers.

The Taylor Report

Published in July 2017, the Taylor Report was an independent review by chief executive of the Royal Society of Arts, Matthew Taylor, which explored new forms of work on worker rights and responsibilities, as well as on employer freedoms and obligations. It set out 7 principles to address the challenges facing the UK labour market:

– The national strategy for work should be based on the principle of ‘Good Work’, with the same basics of employment applied to all workers, including consistent taxation practices and better technological uptake.

– In pursuit of fairness, the lines between employed and self-employed need to be clarified in order to protect the worker.

– The law and the way it is promulgated and enforced should help firms make the right choices and individuals to know and exercise their rights.

– Responsible corporate governance, good management and strong employment relations within the organisation need to be at the core of future plans.

– Everyone must feel that they have realistically attainable ways to strengthen their future work prospects.

– For the benefit for firms, workers and the public interest we need to develop a more proactive approach to workplace health.

– An increase in the National Living Wage needs to be accompanied by sectoral strategies engaging employers, employees and stakeholders to ensure that people are not stuck at the living wage minimum.

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