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Calls for Changes to Operation of ‘Gig Economy’ Employers

Employers in the so-called ‘gig economy’ have recently found themselves in the spotlight again, after a report from the Work and Pensions Committee criticised them for utilising what the Committee referred to as ‘bogus’ self-employment practices

Committee’s Recommendations

The Committee raises a number of key points in its report, including:

  • The freedom companies appear to have to deny workers the rights that come with “employee” or “worker” status fails to protect workers from exploitation and poor working conditions. It also leads to substantial tax losses to the public purse, and potentially increases the strain on the welfare state.
  • Designating workers as self-employed because their contract offers none of the benefits of employment puts the cart before horse, however this false logic appears to have taken hold, enabling companies to propagate a myth of self-employment.
  • Where there are tax advantages to both workers and businesses in opting for a self-employed contractor arrangement, there is little to stand in the way.
  • An assumption of the employment status of “worker” by default, rather than “self-employed” by default, would protect both those workers and the public purse. It would put the onus on companies to provide basic safety net standards of rights and benefits to their workers, and make the requisite contributions to the social safety net. Companies wishing to deviate from this model would need to present the case for doing so, shifting the burden of proof of employment status onto the better resourced company. 
  • Self-employed people and employees receive almost equal access to all of the services funded by NI, especially with the introduction of the new state Pension, yet the self-employed contribute far less. The incoming Government should set out a roadmap for equalising employee and self-employed National Insurance Contributions.

Calls for Government to Close Loopholes

"Companies in the gig economy are free-riding on the welfare state, avoiding all their responsibilities to profit from this bogus "self-employed" designation while ordinary tax-payers pick up the tab,” commented Frank Field MP, Chair of the Committee. “This inquiry has convinced me of the need to offer "worker" status to the drivers who work with those companies as the default option. This status would be a much fairer reflection of the work they undertake which seems to fall between what most of us would think of as "self-employed" or "employed".”

“It is up to Government to close the loopholes that are currently being exploited by these companies, as part of a necessary and wide ranging reform to the regulation of corporate behaviour," he added.

Shifting the Burden of Proof

The call to shift the burden of proof of employment status from the individual to the company has been echoed in a report by the RSA (Royal Society for the encouragement of Arts, Manufactures and Commerce).

The report makes a number of recommendations that the RSA believes will make the gig economy ‘fit for the future’, including:

  • Giving gig workers more power to hold companies to account under the law.
  • Shifting the burden of proof to companies to prove gig workers are not employees.
  • Strengthening penalties against companies who use clauses that prohibit employment status litigation.
  • Scrapping tribunal fees for workers challenging their employment status, and modifying tribunal rules to allow for a fast-track summary process to give workers immediate clarity.

Contains Parliamentary information licensed under the Open Parliament Licence v3.0.

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