'Exploitation' of gig economy workers hitting pensions by £182m every year

Gladys Abbott
November 21, 2017

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. We call for a new framework, including new legislation, to address the urgent need to create a level playing field for businesses and to shield workers from exploitation.

"Uber, Deliveroo and others like to bang the drum for the benefits of flexibility for their workforce but now 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.

Labour MP Frank Field, chairman of the Work and Pensions committee, said: "It is time to close the loopholes that allow irresponsible companies to underpay workers, avoid taxes and free ride on our welfare system".

"This aligns with Taylor's desire to replicate good working practices which are undertaken by many United Kingdom employers and this together with the recommendation that the Director of the Labour Inspectorate takes a proactive approach to enforcement, conducting a deep dive into industry practices, will have a similar effect", Nicol said.

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 MPs' draft bill aims to clarify the definitions of employment status and enshrine the presumption that those working for companies over a certain size are all classed as workers, with rights to the minimum wage and holiday pay.

"Currently, these 1.3 million* workers have few rights and are entirely excluded from the auto enrolment programme due to their self-employed status".

It says personnel should be classed as a "worker by default" to ensure access to basic rights such as sick pay because hundreds of thousands are now being "burdened" by risks associated with flexible working.

Report author Matthew Taylor
Video Taylor defends findings of workplace review

It is also facing a challenge to retain its operating licence in London after transport chiefs said it could not be renewed on corporate responsibility grounds.

MPs have called for a change in the law to prevent companies exploiting workers.

Tougher enforcement and fines for repeat offenders: The committees recommend the introduction of stronger penalties "for repeat or serious breaches of employment legislation", and also the naming and shaming of "non-accidental breaches of employment rights".

Enforcement bodies would be given the power to issue fines for noncompliance under the proposals, inspecting labour practices more frequently, and ensuring the risks of being caught outweigh the potential gains.

The committee has also called for a loophole known as the "Swedish derogation" which means agency workers can be paid less than employees doing the same job, something the Taylor review had called for.

A spokeswoman said the government recognised the "labour market is not working for everyone".

The bill proposes asking the Low Pay Commission to test the idea of offering premium pay, above the legal minimum wage, to workers who do not have guaranteed hours.

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