Workers in the gig economy should be offered a workplace pension, the UK’s pensions watchdog has said.
Following the Supreme Court’s judgment that Uber drivers are “workers” earlier this year, The Pensions Regulator (TPR) has been working with the ride hailing app on setting up a pension scheme for drivers, the regulator’s chief executive Charles Counsell has revealed on its TPR Talks podcast.
After the ruling in February this year, Uber agreed that it would recognise its 70,000 UK drivers as workers, not self-employed as it had previously argued, and would begin offering them entitlements including a minimum hourly wage and a pension.
Counsell suggested that other firms in the gig economy should follow suit. “I am going to call on other organisations in the gig economy to start to recognise that the people who work for them are workers and should be eligible for a pension,” he said.
“It is all about helping people working in the economy to have a decent standard of living in retirement and I really encourage those in the gig economy to take a stance and start putting their workers into pensions. Let’s not deal with this on a case-by-case basis.”
Steven Timms, chair of the work and pensions select committee, said the committee would be launching an inquiry this autumn into how to help those in the gig economy save for retirement.
Responding to Counsell’s comments, Monica Ma, pensions and share schemes solicitor at Keystone Law, said gig economy firms needed to carry out a careful assessment of their workforce to ensure they comply with their auto-enrolment obligations.
“Under the relevant legislation, the term ‘worker’ is very widely defined and may well encompass many individuals who work for these companies. Depending on their ages and earnings, these workers are entitled to be provided with pension benefits by these companies,” she said.
“It will be shortsighted for a company to bury its head in the sand as this will just be storing up problems for the future. Apart from potential litigation from disgruntled workers, it may also find that future investors (be it during a funding round or an IPO) may look at this compliance issue carefully as, apart from reputational concerns, the potential costs to the company could be substantial.”
Uber has been contacted for further comment.