“Worker by default” status proposed in new gig economy Bill

"Gig" workers such as couriers could receive greater legal protection and more clarity about their status

The Work and Pensions Committee and Business, Energy and Industrial Strategy (BEIS) Committee have produced a draft Bill designed to tackle the perceived exploitation of “gig economy” workers.

If the Bill passed into legislation, it would assume a “worker by default” status, meaning employers would have to offer basic rights such as sick pay and holiday pay.

The publication of the draft Bill and its accompanying report comes in response to Matthew Taylor’s review of modern employment practices, which came out this summer.

It also follows on the heels of numerous tribunal cases debating worker status, including a decision last week by the Central Arbitration Committee that Deliveroo riders are self-employed contractors rather than workers.

Chair of the Work and Pensions Committee Frank Field MP said the proposed Bill would give the Prime Minister the “opportunity to fulfil the promise she made on the steps of Downing Street on her first day in office” and stop the “mass exploitation of ordinary, hard-working people in the gig economy”.

He added: “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 companies to underpay workers, avoid taxes and free ride on our welfare system.”

Alongside the proposed default worker status, the committees’ recommendations include:

  • Clearer statutory definitions of employment status: “This legislation should emphasise the importance of control and supervision of workers by a company, rather than a narrow focus on substitution, in distinguishing between workers and the genuine self-employed.”
  • Pay premiums for those with non-guaranteed hours: The committees recommend that the Government works with the Low Pay Commission to pilot a pay premium on the national minimum or national living wage for those with non-contracted hours.
  • Guaranteed rights after a longer break in service: This would mean extending the time allowance for a break in service while accruing employment rights from a week to a month.
  • Written statement of employment particulars: Employees and workers should have the right to receive, from day one, a clear written statement of employment conditions, within seven days.
  • Information and Consultation regulations should also apply to “worker” groups: “We recommend that people on worker contracts, as well as employees, be counted towards the 50 workers needed before a company is covered by the ICE regulations. We also recommend the threshold for implementation of the regulations be reduced from 10% to 2% of the workforce.”
  • “Swedish derogation” loophole to be eliminated: This has enabled some employers to opt-out of equal pay for agency workers with more than 12 weeks’ service, which has been “subject to widespread abuse”.
  • Tougher enforcement and fines for repeat offenders: The committees recommend the introduction of stronger penalties “for repeat or serious breaches of employment legislation”, and also the naming and shaming of “non-accidental breaches of employment rights”. They also call for more resources to be allocated to the Director of Labour Market Enforcement.
  • Shift the onus from employees to employers on employment status, and stop the reliance on tribunals to clarify status: “Workers frequently rely on the employment tribunal system to establish their rights. But restrictions on class actions and the absence of penalties for widespread abuses may incentivise employers to “wait and see” whether individuals are willing to risk pursuing their rights.”

Rachel Reeves MP, chair of the BEIS Committee, said that too much of the burden of flexibility in the gig economy is placed on workers and taxpayers. “This must change,” she said.

“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.

“We need new laws but also much tougher enforcement, to weed out those businesses seeking to exploit complex labour laws, and workers, for their competitive advantage.”

However, Sarah Ozanne, an employment lawyer with law firm CMS, commented: “The proposed ‘worker by default’ regime places the burden on businesses and risks reformulating the existing quagmire of what is genuine self-employment.”

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