Commons Committee Report on Gig Economy

The issue of the ‘gig economy’ and worker status (which we had previously reported on) has been very much in the spotlight recently with employment tribunal claims against companies such as Uber and Deliveroo making headline news.

Earlier this year, the House of Commons Work and Pensions Committee (‘Committee’) launched an enquiry into the gig economy; hearing evidence from companies and individuals alike into how it operates and the working practices used. It has recently published its findings in a report entitled, “Self-employment and the gig economy” (‘Report’).

The Report concludes that the introduction of the new state pension makes it difficult to justify different rates of NI contributions for employees and the self-employed and calls on the new government to equalise NICs for all workers regardless of their employment status.

It also calls on the government to close loopholes that the Committee believes incentivise companies to engage self-employed workers who have limited employment rights. Although self-employment can provide greater flexibility and tax incentives for companies and workers alike, the Committee clearly felt that it was being used to reduce costs and was not always in the worker’s best interests.

One of its principal recommendations was that individuals should be classified as “workers” by default rather than “self-employed”. As there is no ‘worker’ status in tax law, tax status would be unaffected and the Committee felt this would allow individuals to access those employment rights commensurate with ‘worker’ status, (such as paid holidays and the national minimum wage), which are not available to the genuinely self-employed.

The Committee also highlighted what it perceived to be the ‘huge risks’ faced by an individual in challenging his or her employment status. By using ‘worker’ as the default status, the burden of proof would essentially shift to the company to show that the default model was incorrect and that an individual was in fact self-employed.

It will be interesting to see which, if any, of the Committee’s recommendations the incoming government will adopt. However, this is clearly an issue that will not be resolved any time soon.

 

If you have any questions about this article, please contact Debbie Sadler on 0118 957 5337 or at d.sadler@hewetts.co.uk.

Published on 16/06/2017

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