MPs publish draft Bill to close gig economy loopholes

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​A new 'worker by default' status has been recommended by a joint draft Bill on ending gig economy exploitation from the Work and Pensions and Business Committees

If rolled out the onus would fall on companies to prove self-employed status, rather than forcing workers to via the courts. Otherwise the company would be obliged to offer worker-status benefits such as holiday and sick pay.

The two committees, which have based their draft Bill on recommendations made in the Taylor Review, have also recommended companies be fined if they falsely classify people and deny them benefits. It suggested ‘a significant increase in fines for offending employers’, as well as ‘an obligation on employment tribunals to consider the increased use of higher, punitive fines and costs orders if an employer has already lost a similar case’.

The draft Bill stated that: ‘The current situation 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.’

The Bill also proposes setting a wage premium for workers without contracted hours that is above the national minimum (£4.05 to £7.05 depending on age) and living wage (currently £7.50 an hour). It argues this could prompt employers to offer more stable work and ensures agency workers are not paid less than permanent employees doing the same job.

The committees have also called for ‘concentrated deep dives' in sectors and areas where there is evidence of frequent exploitation.

“The Bill would put good business on a level playing field, not being undercut by bad business,” said Frank Field, the Labour chair of the Work and Pensions Committee. “It is time to close the loopholes that allow irresponsible companies to underpay workers, avoid taxes and free-ride on our welfare system."

Frances O'Grady, general secretary of the TUC, welcomed the proposals. "Employment status is complex and can deprive people of their rights at work,” she said. “So the committees are right to call for reform and wide consultation. The time has come for a Royal Commission, including trade unions and employers."

But Neil Carberry, managing director for people and infrastructure at the CBI, said the recommendations risk limiting flexibility for businesses. “Based on a very limited review of the evidence the committees have brought forward proposals that close off flexibility for firms to grow and create jobs, when the issues that have been raised can be addressed by more effective enforcement action and more targeted changes to the law," he said.

The GMB union said it was disappointed at the limited ambition of the report. “If these plans go ahead they may make a small difference,” said Tim Roache, GMB general secretary. “However, the fact remains that without real investment in HMRC and a political will to get tough on rogue employers who are cheating the British taxpayer out of millions and reaping profits out of worker exploitation, then there will be no significant change.”

He added: “We need proper legislation to stop unscrupulous bosses exploiting workers by ensuring employment rights from day one, abolishing zero-hours contracts, and restricting those who make temporary and agency work a permanent feature of their business model by employing them on lower rates than the rest of the workforce.”

The joint draft Bill comes in the wake of a recent test case ruling by the Central Arbitration Committee (CAC) that Deliveroo riders are correctly classified as self-employed. It also closely follows Uber losing an employment appeal tribunal against an earlier decision to grant its drivers workers' rights.

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