HR · 27 November 2017

Employment tsar delivers mixed review of draft gig economy bill

bogus self-employment
MPs have claimed gig economy firms such as Uber have treated flexible working as a tax loophole

The author of a government-backed review into modern employment practices has broadly welcomed a draft gig economy bill seeking to tackle exploitation of on-demand workers, but warned over-regulation could spell the end of the model.

Although welcoming the principles put forward in a new draft parliamentary bill, Matthew Taylor, chief executive of the Royal Society of Arts (RSA), was reluctant to offer full support for the proposed legislation.

On 20 November, the parliamentary Work and Pensions and Business, Energy and Industrial Strategy (BEIS) committees published a joint report and draft gig economy bill aimed at challenging so-called “bogus self-employment” used as a route to cheap labour and tax avoidance.

Specifically, the bill included a series of recommendations to challenge exploitations among gig economy firms, chiefly through its proposal that “worker” status should become the default for people using on-demand platforms to find work.

“The bill would put good business on a level playing field, not being undercut by bad business,” said Labour Party MP and Work and Pensions committee chair, Frank Field.

Rachel Reeves, Labour MP and chair of the BEIS committee, said firms like Uber and Deliveroo continued to champion flexible models of employment, but left the burden on taxpayers and workers.

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

“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 bill reflected some of the recommendations made in Matthew Taylor’s review of modern employment practices, particularly in tightening up tax and workplace benefits responsibilities of employers.

Find out more about Matthew Taylor’s gig economy review:

Speaking as part of a panel put together by tax consultancy RSM in response to the proposed bill, Taylor said he was “delighted” that the committees had broadly taken his own recommendations into account. However, he raised questions over how “worker by default” would work in practice.

“If we can make it work then I think worker by default will be a good thing,” Taylor said. “But what about a window cleaner? Do we assume they’re a worker by default so they are entitled to five minutes of holiday pay? In the review, we suggested that worker status definitions should apply to a quantum of workers in roughly the same role.”

Taylor added that better employment practices should come from business, not legislation, where employers should regularly measure staff engagement and wellbeing.

MPs also attempted to address low pay in the sector. The bill asked government to rule out introducing any legislation that undermined either the National Living Wage or National Minimum Wage, and stated that companies should guarantee hours that reflect the periods worked each week, or compensate workers for uncertainty.

Taylor’s review had warned that legislation guaranteeing a minimum wage could see high numbers of workers logging onto apps to find work when there was little available, and still expect the minimum wage. He said that the bill had failed to clarify this question.

Read our insider’s damning account of working for Deliveroo

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Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.