Raymond Doherty 2 May 2017 03:20pm

MPs slam employment practices of gig economy

Gig economy companies like Uber, Amazon, Hermes and Deliveroo are passing the financial buck to the government with "bogus" employment loopholes, say MPs

A scathing report from the Work and Pensions Committee published today found that the freedom such companies enjoy to deny workers the rights that come with “employee” or “worker” status fails to protect workers from exploitation and poor working conditions.

The increase in self-employed and gig workers and the explosion of "disruptive" businesses are leading to a change in working practices. Approximately 4% of UK working adults aged between 18 and 70 – around 1.3 million people - are engaged in “gig” work in the UK.

These companies are potentially creating an extra burden on the welfare state while simultaneously reducing the tax contributions that sustain it, said the committee.

The committee, led by the Labour MP Frank Field, said that an assumption of the employment status of “worker” by default, rather than “self-employed” by default, would protect both those workers and the public purse.

“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’," said Field.

“It would also protect them from some of the appalling practices that have been reported to the committee in this inquiry. Uber’s recent announcement that it will soon charge its drivers for sickness cover is just another way of pushing costs onto the workforce, to reinforce the impression that those workers are self-employed.”

The results of the government-commissioned Taylor Review - a country-wide evidence gathering tour to inform its review of modern employment practices – have yet to be published.

The report follows the recent ruling by the London Central Employment Tribunal, which found that two Uber drivers are not self-employed but workers who are entitled to essential workers’ rights including to be paid the National Minimum Wage and receive paid holiday.

The ruling will likely encourage more gig workers to bring claims against their employers in order to secure better employee rights.

Research published in March revealed that more than half of gig economy workers (57%) believe that gig economy businesses are exploiting a lack of regulation.

Nearly two-thirds of gig workers surveyed believe the government should regulate to guarantee them basic employment rights and benefits such as holiday pay.

The UK self-employed workforce has grown by nearly 50% since the start of the century but its earnings have fallen by around £60 a week over the same period and are now 15% lower than they were in 1995.