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UK – Politicians call for crackdown on gig economy firms that exploit employment law loopholes

20 November 2017

Commons committees are calling on the government to close loopholes that allow firms to underpay workers.

The Work and Pensions and Business, Energy and Industrial Strategy Committees today published a joint report and draft bill to close the loopholes that allow companies to use bogus "self-employment" status as a route to cheap labour and tax avoidance.

Frank Field, MP and 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."

The report added that new laws and tougher enforcement are needed to protect workers.

“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,” Rachel Reeves MP, Chair of the Business, Energy and Industrial Strategy Committee, said. “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,” Reeves said. “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."

The Taylor Review, published in July, made a number of recommendations to employment practices and called for a new category of worker to be created called ‘Dependent contractors’.

Matthew Taylor commented on the report, “This excellent report shows that whatever concerns the government has about my recommendations, parliamentary support is no longer a reason not to pursue them.”

The Committees also stated in the bill that the current situation in the gig economy 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. 

Earlier this year gig economy firms Uber and Deliveroo have been brought to court over the issue of self-employment. Earlier this month Uber lost an appeal against a tribunal ruling over the employment rights of its drivers. Last week, Deliveroo won in a case that ruled its riders are self-employed and not employees.

The bill also called for loopholes that enables agency workers to be paid less than permanent employees doing the same job to be closed. 

Julia Kermode, chief executive of The Freelancer & Contractor Services Association, commented on the bill, “As the gig economy is on the rise we need to act to protect the vulnerable and precarious whilst not unfairly penalising genuinely self-employed people.  Introducing fines for falsely classifying workers as self-employed could be an effective deterrent and go some way towards preventing exploitation of those in precarious roles, but care is needed because employment status is complex and experts don’t always agree, so fines could unfairly penalise companies that have simply made a mistake rather than deliberately set out to exploit their workforce.”


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