This month MPs came together to address the alleged bogus self-employment practices that have become a major feature of modern working practices.
On 1 May 2017 the Work and Pensions Committee published a report after hearing from gig economy companies like Uber, Hermes and Deliveroo and from the drivers who carry out the work for them.
These companies maintain that drivers are self-employed and are paid for the “gigs” they do, such as delivering food or taking a passenger from A to B. They say this gives drivers complete flexibility and control to pick and chose when and where they work and that drivers enjoy the freedom of this arrangement. There’s certainly some truth in that as an estimated five million people in the UK are engaged on this basis.
But what happens when things go wrong?
Well these companies have all been challenged because the individuals working for them want greater employment protection. It started with the famous Uber case last October when the Employment Tribunal ruled that drivers were workers and therefore entitled to receive the minimum wage, holiday and sick pay, rest breaks, and an employer contribution into an auto-enrolment pension scheme.
Similar judgements have been found against Pimlico Plumbers and courier company Citysprint, and there are plenty more waiting in the wings. It could cost companies millions.
Committee critical of gig companies
So MPs are finally taking action. The report calls on the next government to update laws so that individuals are protected against exploitation. It’s not good enough that people engaged on the ‘gig’ basis are prevented from receiving basic rights when the reality is that they are workers, not self employed.
Frank Field who chaired the committee, said: “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’.”
The report said that forcing people into a self employed status means that companies in the gig economy are free-riding on the welfare state and depriving the state of essential tax revenues.
The report is one of the first steps in an attempt to tackle the issue. The government backed Taylor Review into modern employment practices will be published in the autumn and is expected to recommend that employment rights need to change to keep up with the new ways of work.
In the past few weeks alone, we’ve seen Uber subsidise a health insurance policy for drivers and Deliveroo amend contracts so that driver don’t have to wear uniforms and can work for other companies – all attempts to move away from ‘worker’ status. Will that be enough to convince the courts? Considering the recent judgements and the report finding, it seems unlikely.
If we are right then we strongly recommend employers to review how they are engaging with individuals who they define as “self employed”, as the courts are quite happy now days to jump over the contract and look at what is in fact the true nature of the working relationship. We believe that many “self employed” individuals are in fact likely to have worker status and this can leave companies very exposed.
If you would like to discuss any of the information included above, please contact Elizabeth Maxwell from our Employment team on 01322 422551 or by emailing email@example.com.