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Proposals to Tackle Exploitation in the Gig Economy

Two influential Parliamentary Committees have published a joint report and draft Bill that they say will help to end exploitation in the gig economy.

The Work and Pensions and Business, Energy and Industrial Strategy Committees say that the law must not allow willingness to exploit workers to be a competitive advantage, and claim their draft Bill will close existing loopholes that allow companies to use bogus "self-employment" status as a route to cheap labour and tax avoidance.
 
The Committees have identified three key areas for reform – employment status, minimum wage and enforcement.
 

Employment Status

With regards to employment status, the report’s findings include:
 
  • The current situation puts an unacceptable burden on workers to address poor practice through an expensive and risky court case while the companies themselves operate with relative impunity. 
  • Clarified legislation to protect the legitimately self-employed and a new presumption of "worker by default" would require companies to provide basic safety net standards of rights and benefits to their workers—or prove that their working practices are genuinely reflecting of self-employment.
  • An obligation on employment tribunals to consider the increased use of higher, punitive fines and costs orders if an employer has already lost a similar case.
 

Minimum Wage

On minimum wage the report says:
 
  • A flexible labour force can benefit workers, consumers and businesses – but it is not acceptable that the gig economy burden workers and taxpayers with the risks of this flexibility.
  • Workers should not be faced with a choice between not working, or working for below minimum wage.
  • The Government should rule out introducing any legislation that would undermine the National Minimum Wage/National Living Wage.
  • The loophole that enables agency workers to be paid less than permanent employees doing the same job must be closed.
  • Companies should either guarantee hours that reflect the periods worked each week, or compensate workers for uncertainty.
 

Enforcement

Issues regarding enforcement include:
 
  • Currently, employers need only fear an inspection of their labour practices "once every 500 years"- and receive only paltry fines if they are found to be breaking the law.
  • The enforcement bodies and the Director of Labour Market Enforcement urgently need more resources - paid for by a significant increase in fines for offending employers - to root out bad practice.
 
“Recent cases demonstrate a need for greater clarity in the law to protect workers,” commented Rachel Reeves MP, Chair of the Business, Energy and Industrial Strategy Committee. “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," she added.
 
Responding to the report, the CBI has expressed concern that the proposals it contains will close off flexibility for firms to grow and create jobs, and says that the issues raised can be better addressed through more effective enforcement action and more targeted changes to the law.
 
“The Taylor Review report offered an insightful picture on the challenges we must face together to improve our labour market – but the solutions to address this must be developed with businesses, and designed to ensure that those who enjoy working in flexible ways do not have opportunities closed off to them,” said Neil Carberry, CBI Managing Director for People and Infrastructure.
 

Contact Us

For expert legal advice on these issues, and other areas of employment law, then contact our specialist employment lawyers today.
 
Contains Parliamentary information licensed under the Open Parliament Licence v3.0.
 

 

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