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Work and Pensions Committee deliver further blow against “gig economy”

12 May 2017 #Other

In an extremely scathing report, the Work and Pensions Committee has suggested working under a self-employed status leaves workers vulnerable to exploitation, and that those working for firms who use these contracts (including Uber and Deliveroo) should have full worker rights rather than “bogus” self-employment status. This is part of a growing backlash against “gig economy” arrangements (courts and tribunals have also been critical, see previous blogs here and here).

Chairman Frank Field MP stated that worker status should be offered as a default option to staff of gig economy firms. He believes this would protect staff from abuse (workers enjoy greater rights than self-employed individuals, including national minimum wage and holiday pay), as well as preventing substantial losses to the treasury (self-employed workers pay less NI and firms also escape paying the apprenticeship levy and pension auto-enrolment contributions). If a firm wanted to classify someone as self-employed, they would have to justify such a move. This would place the burden of proof on the company, rather than the worker.

The government will publish a response to the report in due course. Coupled with the Taylor Report into modern employment practices, it is likely further changes may be coming in the future. However, given the government’s recent U-turn on increasing National Insurance Contributions for the self-employed (as originally set out in the 2017 Spring Budget but then retracted) the pace of any such changes remains to be seen. Amid growing pressure for reform, employers will need to be aware of possible future changes when considering how they structure their working relationships.

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Michael Hibberd

Michael Hibberd
Senior Solicitor

E: mhibberd@clarkslegal.com
T: 0118 953 3905
M: 0779 900 7511