Companies in Britain’s growing gig economy are forcing workers into bogus self-employment and free-riding on the welfare state, an influential committee of MPs has said.
In a damning assessment of modern employment practices, the parliamentary work and pensions committee calls on the next government to bring laws up to date so that workers are better protected from exploitation. Given concerns about the rising number of workers classed as self-employed contractors with no access to sick benefit or holiday pay, it wants the default status for people in the gig economy to be “worker” rather than “self-employed”.
In an inquiry now curtailed by Theresa May calling a snap election, the committee questioned companies including Uber, Amazon, Hermes and Deliveroo that use self-employed workers widely. It also heard from their drivers.
An abridged report into the committee’s findings on Monday accuses companies of propagating a myth around self-employment and rebuffs their claims to be providing flexibility for workers.
The committee, led by the Labour MP Frank Field, criticised such arguments as fiction. It also highlighted that forcing people into self-employment as couriers, taxi drivers and other roles, rather than taking them on as employees, was depriving the state of badly needed tax revenues and creating an extra burden on the welfare system.
“Companies in the gig economy are free-riding on the welfare state, avoiding all their responsibilities to profit from this bogus ‘self-employed’ designation while ordinary taxpayers pick up the tab,” said Field.
“This inquiry has convinced me of the need to offer ‘worker’ status to the drivers who work with those companies as the default option. 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’. It would also protect them from some of the appalling practices that have been reported to the committee in this inquiry.”
The committee’s report found self-employment could indeed be “genuinely flexible and rewarding for many”, but that people on employment contracts were also able to work flexibly. “Flexibility is not the preserve of poorly paid, unstable contractors,” said the report, published ahead of Wednesday’s dissolution of parliament.
Field said: “It is clearly profit and profit only that is the motive for designating workers as self-employed.”
The report comes ahead of the government’s Taylor review of modern working practices, which is likely to recommend that self-employed gig economy workers should be granted greater protections and benefits.
The MPs’ report will pressure companies further to change staffing practices. It follows an employment tribunal ruling last year that found Uber drivers were wrongly classified as self-employed and should be classed as workers.
Uber plans to challenge the ruling in the courts later this year, and in the meantime has sought to quell criticism of its practices. The San Francisco-based ride-hailing firm said last week that it would start to offer its drivers in the UK sickness cover in exchange for a £2 per week fee.
Field dismissed Uber’s move, saying the plan was “just another way of pushing costs onto the workforce”.
The MPs also urged the next government to look again at national insurance contributions for the self-employed. The chancellor, Philip Hammond, announced plans to increase those contributions in his maiden budget in March, but was quickly forced into an embarrassing U-turn following a backbench revolt.
Monday’s report also notes that self-employed people and employees receive almost equal access to the services funded by national insurance contributions “yet the self-employed contribute far less”. “The incoming government should set out a roadmap for equalising employee and self-employed national insurance contributions,” it said.
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