UK MPs: Gig Economy Burdening Welfare State, Exploiting Self-Employed Workers

UK MPs: Gig Economy Burdening Welfare State, Exploiting Self-Employed Workers

A new report from the UK House of Commons’ Work and Pensions Committee paints a pretty dismal picture of the gig economy in Great Britain and warns that the growing number of self-employed workers there (A total of 5 million, or 15 percent of all UK workers) “presents fundamental challenges for the welfare state.” Mark Eltringham at Workplace Insight peruses the conclusions of the MPs’ inquiry, which found “appalling practices” among gig economy employers:

In its report the Work and Pensions Committee says Government must close the loopholes that are currently allowing “bogus” self-employment practices, which are potentially creating an extra burden on the welfare state while simultaneously reducing the tax contributions that sustain it. … Companies relying on self-employed workforces frequently promote the idea that flexible employment is contingent on self-employed status, but the Committee says this is a fiction.

The Committee says: “The apparent freedom companies enjoy to deny workers the rights that come with “employee” or “worker” status fails to protect workers from exploitation and poor working conditions. It also leads to substantial tax losses to the public purse, and potentially increases the strain on the welfare state. Designating workers as self-employed because their contract offers none of the benefits of employment puts cart before horse. It is clear, though, that this logic has taken hold, enabling companies to propagate a myth of self-employment. This myth frequently fails to stand up in court, but individuals face huge risks in challenging their employment status that way.”

Matthew Taylor, a former advisor to Tony Blair who was appointed by Prime Minister Theresa May last October to lead a separate inquiry into contemporary employment practices, has suggested that the novel circumstances of the gig economy need to be explicitly addressed in UK employment law, and has also floated a system for employees to check their employment status, as Marianne Calnan reported at People Management in February:

The Taylor review said it was already considering introducing an online government tool that would ask workers questions to help them determine their employment status in the eyes of the law. If the tool states the person is not self-employed, the burden of proof could then be put on the employer to disprove that in an employment tribunal. If implemented, the online tool could go some way to addressing government concerns that some employers are treating workers as employees but classifying them as ‘self employed’ to avoid legal responsibilities and cut tax liabilities.