MPs publish draft bill to combat gig economy exploitation
Tuesday (21st November) saw The Work & Pensions Committee and the Business, Energy & Industrial Strategy Committee publish a joint report and draft bill that, if passed, will change the rights for those working in the so-called ‘gig economy’.
A company that hires its staff under the gig economy umbrella considers them as self-employed contractors who are not entitled to the same benefits as those classified as workers. According to reports by the McKinsey Global institute (MGI), there are around five million people currently working in the gig economy in the United Kingdom, equating to almost 16% of the entire full and part-time workforce.
Cited as a ‘mass exploitation of ordinary, hard-working people’ by MPs, the proposal put forward by the two parliamentary groups aims to close loopholes that enable companies to avoid providing gig economy workers access to basic workers’ rights such as holiday pay and the basic minimum wage.
The new legislation fundamentally changes the onus of proof for “worker” status in that every individual will be presumed to be a “worker” unless the engaging employer can prove otherwise through the application of several business type tests.
Chair of the Work and Pensions Committee, Labour MP Frank Field, believes the draft bill will ensure good business will no longer be undercut by bad business practice, although the GMB Union believes the new bill displays a lack of ambition.
Lee Muter, Employment Taxes partner at UNW LLP, believes the new bill, if enacted in its current draft form, could potentially add another complicated layer to what is already a complex and subjective area for employers:
“One of the many business tests companies and employers must consider is the level, and amount of control, they have over the individuals work. This includes how they do the work, which itself can be extremely difficult to interpret and measure, as an individual could be self-employed for tax reasons, but classed as a ‘worker’ for employment law purposes. There is potential for the proposals to complicate this even further.”
“It is likely that the Government will soon look to apply the IR35 tax rules currently in place for the Public Sector into the Private Sector which would add further administration for employers engaging individuals and paying them without deduction of tax.”
HMRC has opened up a 12-week consultation for the proposals to extend the IR35 ‘Off-Payroll’ working rules to the private
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