Government publishes draft gig economy bill

The Work and Pensions Committee and the Business, Energy and Industrial Strategy Committee have published a draft bill setting out proposed legislation which, if passed, would assume ‘worker by default’ status for individuals working in the gig economy and entitle them to employment rights such as the national minimum wage, sick pay and holiday pay.

The draft bill proposes to close existing loopholes and clamp down on organisations that currently do not pay the national minimum wage and holiday pay by classing workers as independent contractors.

According to its proposals, workers should not be faced with a choice between not working, or working for below minimum wage.

It also recommends that:

• The government should rule out introducing any legislation that would undermine the national minimum wage or national living wage.

• The loophole that enables agency workers to be paid less than permanent employees doing the same job must be closed.

• Organisations should either guarantee hours that reflect the periods worked each week, or compensate workers for uncertainty.

These recommendations follow rulings in cases involving Uber drivers and Deliveroo riders, who feel they should be treated equally in terms of employment status and entitlement to employment rights such the receipt of holiday pay and the national minimum wage.

Frank Field MP, chair of the Work and Pensions Committee, said: “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 [organisations] to underpay workers, avoid taxes and free ride on our welfare system.”

Rachel Reeves MP, chair of the Business, Energy and Industrial Strategy Committee, added: “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 [organisations] 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.”

Helen Murphie, employment team partner at law firm Royds Withy King, said: “Making individuals ‘workers’ by default would be a significant change to the current law.  The new rules would provide protection to individuals who work flexibly and undoubtedly make it more difficult for businesses to exploit the system by relying on self-employed people to carry out work.

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“The bad news is that it will mean an additional financial burden for some businesses which have flexible workforces, which, in turn, may mean a hike in prices for the consumer. Businesses will also face additional administrative and financial costs if they are obliged to provide written statement of terms, obligations and rights to workers in the future.

“It’s important for businesses that routinely rely on self-employed individuals to review the basis of their engagement, particularly in light of recent court cases which have found in favour of worker status. It’s inevitable that change is on its way.”