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  • International Workplace
  • 5 December 2017
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Committees publish Bill to end exploitation in the gig economy

The Work and Pensions and Business, Energy and Industrial Strategy Committees have 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, saying the law must not allow willingness to exploit workers to be a competitive advantage.

Commenting on the draft Bill, Rt Hon Frank Field MP, Chair of the Work and Pensions Committee, said:

"The two Committees are… presenting the Prime Minister with an opportunity to fulfil the promise she made on the steps of Downing Street on her first day in office, with a draft Bill that would end the mass exploitation of ordinary, hard-working people in the gig economy.

“The Bill would put good business on a level playing field, not being undercut by bad business. It is time to close the loopholes that allow irresponsible companies to underpay workers, avoid taxes and free ride on our welfare system." 

Referring to recent cases addressing the gig economy, Rachel Reeves MP, Chair of the Business, Energy and Industrial Strategy Committee, highlighted the need for new laws and tougher enforcement to protect workers, stating:

"Uber, Deliveroo and others like to bang the drum for the benefits of flexibility for their workforce but currently all the burden of this flexibility is picked up by taxpayers and workers. This must change.

“We say that companies should pay higher wages when they are asking people to work extra hours or on zero-hours contracts.

“Recent cases demonstrate a need for greater clarity in the law to protect workers. Responsible businesses deserve a level-playing field to compete, not a system which rewards unscrupulous businesses.

“We need new laws but also much tougher enforcement, to weed out those businesses seeking to exploit complex labour laws, and workers, for their competitive advantage."

The report makes the following comments and recommendations:

Employment status

  • 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. 
  • Clarified legislation to protect the legitimately self-employed and a new presumption of ‘worker by default’ would require companies to provide basic safety net standards of rights and benefits to their workers – or prove that their working practices are genuinely reflecting of self-employment. 
  • 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, and enabling use of class actions in disputes over wages, status and working time, would reduce the chance and opportunity for employers to simply ‘wait and see’ whether individuals are willing to risk pursuing their rights.

Minimum wage

  • A flexible labour force can benefit workers, consumers and businesses – but it is not acceptable that the gig economy burdens workers and taxpayers with the risks of this flexibility. 
  • Workers should not be faced with a choice between not working, or working for below minimum wage. 
  • The Government should rule out introducing any legislation that would undermine the National Minimum Wage/National Living Wage.
  • The loophole that enables agency workers to be paid less than permanent employees doing the same job must be closed. 
  • Companies should either guarantee hours that reflect the periods worked each week, or compensate workers for uncertainty.

Enforcement

  • Currently, employers need only fear an inspection of their labour practices ‘once every 500 years’ – and receive only paltry fines if they are found to be breaking the law. 
  • The enforcement bodies and the Director of Labour Market Enforcement urgently need more resources – paid for by a significant increase in fines for offending employers – to root out bad practice.
  • Companies that flout the law, and those that tolerate exploitation in their supply chains, should be ‘named and shamed’. In the longer term, embargoing of goods from non-compliant businesses has potential as a ‘very strong incentive’ for retailers to promote compliance in their supply chains
  • Enabling enforcement bodies to issue punitive fines for non-compliance would also help ensure that the risks of being caught outweigh the gains companies stand from illegal pay and practices. 
  • Concentrated ‘deep dives’ in industry sectors and geographic areas, where there is evidence of abuse, by all the enforcing bodies should become a regular part of the armour to protect vulnerable low paid workers. 

The full report can be found here: A framework for modern employment.