HR · 2 May 2017

MPs demand end to bogus self-employment and gig economy exploitation

bogus self-employment
The Work and Pensions Committee claimed the idea gig economy workers were self-employed was “a fiction”

Companies like Uber and Deliveroo must end the “bogus self-employment” status of gig economy workers, according to a committee of MPs.

The parliamentary Work and Pensions Committee listened to representatives from Uber, Deliveroo, Amazon and gig economy workers to conclude that government must close existing loopholes to protect drivers and couriers from potential exploitation.

The committee’s report stated the benefits of flexible employment championed by these firms were “a fiction”, and full workplace rights should be guaranteed for those undertaking regular work.

Labour Party MP Frank Field, head of the committee, said the work undertaken by gig economy workers reflected a traditional employer and employee relationship and argued for a default assumption of “worker”.

“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’,” Field told the committee.

Explaining the dual conflict of workplace exploitation and financial benefits of the model to employers, Field claimed companies dependent on gig economy work were “free-riding on the welfare state… while ordinary tax-payers pick up the tab”.

Uber argued against accusations of bogus self-employment and claimed drivers enjoyed the flexible working status.

“The vast majority of drivers who use Uber tell us they want to remain their own boss, as that’s the main reason why they signed up to us in the first place,” a spokesperson told the committee. 

Uber recently announced that long-term drivers could access basic rights such as sick pay and injury cover via a £2 per month scheme with the Association of Independent Professionals & the Self-Employed (IPSE).

Field criticised the move as “just another way of pushing costs onto the workforce”. 

Meanwhile, a statement from Deliveroo put to the committee argued the company had lifted workers out the so-called “hidden economy”, providing security to couriers and ensuring HMRC could guarantee full tax revenue.

“Deliveroo is proud to offer well-paid, flexible work to over 15,000 riders. Our riders on average earn well above the National Living Wage,” the statement said.

The report represents the most thorough investigation yet into gig economy work and put forward a number of recommendations to the Department for Work and Pensions (DWP) to end the exploitation of workers with the maximum benefit to tax revenue.

Commissioned by prime minister Theresa May, the Taylor review is expected to form the basis of the government’s strategy on solving the gig economy puzzle.

Shortly after speaking exclusively with Business Advice in February, the review’s author, Matthew Taylor, suggested a third-tier of working status – the dependent contractor – could be the most appropriate solution to bogus self-employment in Britain.

Bogus self-employment – An old phenomenon

In response to the committee’s findings, Crawford Temple, CEO of employment trade body PRISM, said the growth of bogus self-employment had accelerated problems already existing in the UK tax system.

“The gig economy is characterised normally by the use of technology and apps to obtain assignments. This in turn means these companies are capable of scaling up incredibly quickly across wide areas.

“However, in reality very little has changed. The irony is the courts have been having to deal with a lot objections from gig economy workers and the government has been criticised for being slow to act,” he said in a statement.

Temple explained that self-employment depended on sufficient choice and flexibility over working hours.

“Employment status must be governed by the spirit of the relationship, and not be exploited by either side. Any perception of flexibility for the worker must be backed up by a degree of choice over when to work, with no penalties when they don’t. This isn’t happening in the gig economy and wasn’t at mini-cabs firms around the country 30 years ago.”

Read our mini-series covering all aspects of gig economy work

  1. The status of gig economy workers
  2. Looking to the future
  3. An international perspective

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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.

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