Government should clamp down on gig economy firms, urge MPs

Businesses are duping workers into believing the only way to maintain a flexible working life is to be self-employed, according to a damning report from an influential committee of MPs.

The report from the Work and Pensions Select Committee, which launched an inquiry into self-employment and the gig economy in December, said employers currently have too much power to arbitrarily decide an individual’s employment status, and called on the government to urgently clamp down on legal loopholes.

“Companies relying on self-employed workforces frequently promote the idea that flexible employment is contingent on self-employed status,” the report said. “But this is a fiction.”

Frank Field, chair of the committee, added: “Self-employment can be genuinely flexible and rewarding for many, but ‘workers’ and ‘employees’ can and do work flexibly. Flexibility is not the preserve of poorly paid, unstable contractors, nor does the brand of ‘flexibility’ on offer from these gig economy companies seem reciprocal.

“It is clearly profit and profit only that is the motive for designating workers as self-employed.”

The notion of ‘false self-employment’ has been raised in many industries over the years but, during its six-month inquiry, the MPs focused on the new generation of delivery and taxi services that have built self-employment into their business models.

The committee heard from Deliveroo, Uber, Hermes and Amazon, which argued that their workers’ flexible work style would be curtailed if they were not self-employed.

Worker representatives put forward by the companies added that they worried their flexible working rights would be taken away if their firms chose to use either an employee or worker model.

“They are their own bosses, so they are flexible; they can choose at any point to use other people to provide deliveries, either instead of themselves or as well as themselves,” said Carole Woodhead, chief executive of Hermes UK. “With that flexibility, we have had couriers providing services for a long period of time.”

However, the committee also heard from people who said their expectations of flexible working had failed to live up to reality, including issues with low pay, long hours, difficulty taking time off and, ironically, inflexible working hours.

“I had no control over anything that I ever did,” said Marc Ramsden, a former Hermes courier, while David Dunn, an Uber driver, said: “There are more drivers out there and you have to work longer hours to be able to earn what you earned before.”

Sean Nesbitt, partner in the employment, pensions and mobility group at law firm Taylor Wessing, said: “The report concludes that rights don't inhibit flexibility. Indeed, they may support new, sustainable, evolutions of work.”

The government has already commissioned a separate independent review into employment practices, which has now been delayed until after the election. Matthew Taylor, who is heading the review, has hinted that he might recommend putting the onus for determining employment status onto employers and has mooted a premium rate for zero-hours workers.

The MPs’ findings were published less than a week after it was revealed that Uber would start offering its drivers sickness and injury cover in return for a £2-a-week charge.

The taxi-hailing app lost an employment tribunal in October, which decided its drivers were workers rather than self-employed, meaning the tech company would have to provide them with a slew of rights they were not presently offered. The company has appealed the decision and the case is scheduled to be heard in September.

Meanwhile, in January, a tribunal ruled that CitySprint cycle courier Margaret Dewhurst should also be classified as a worker, entitling her to holiday pay and the national living wage.

And in February, the Court of Appeal found Gary Smith, a plumber who had worked for Pimlico Plumbers for six years, should also be entitled to worker status.

A Department for Business, Energy and Industrial Strategy spokesperson said: “The independent review of employment practices, led by chief executive of the Royal Society of Arts Matthew Taylor, is considering whether employment practices need to change in order to keep pace with modern business models.”

Read more: Nearly eight million people thinking about joining gig economy, study reveals