In a bid to address ‘bogus’ self-employment practices - said to be reducing the tax take and inflating the benefits bill - the Work and Pensions Committee is calling on the next government to introduce an employment status of ‘worker’ and a plan for equalising the National Insurance contributions (NICs) made by employees and the self-employed.
The recommendations have come after the committee’s inquiry into ‘gig economy’ companies such as Uber, Amazon, Hermes and Deliveroo and from drivers who work with them, which had to be cut back due to the upcoming election.
The published report from the Committee states it wants the next government to tackle the ‘myth of self-employment’ and the loopholes surrounding it, warning of substantial tax losses to the public purse, potentially increasing the strain on the welfare state. There are also concerns that workers are at risk from exploitation and poor working conditions. The report denied arguments from MPs that gig economy companies promote the idea that flexible employment is contingent on self-employed status, stating that this ‘is a fiction’.
Frank Field, Chair of the Work and Pensions Committee, spoke of a need for the Government to close loopholes as part of a “necessary and wide ranging reform to the regulation of corporate behaviour” as it is “clearly profit and profit only that is the motive for designating workers as self-employed.”
Mr Field believes that “companies get all the benefits, while workers take on all the risks and the state will be expected to pick up the tab, with little contribution from the companies involved.”
Self-employed people contribute less but receive almost equal access to all the services funded by the NI as employees with the introduction of the new state pension. Field’s concerns are that companies are “free-riding on the welfare state” adding that they avoid their responsibilities “to profit from this bogus ‘self-employed’ designation” while ordinary tax-payers pick up the tab.
“This inquiry has convinced me of the need to offer ‘worker’ status to the drivers who work with those companies as the default option,” added Field.
“This status would be a much fairer reflection of the work they undertake which seems to fall between what most of us would think of as ‘self-employed’ or ‘employed’.”
An Uber spokesman said: “Almost all taxi and private hire drivers in the UK have been self-employed for decades and with Uber they have more control over what they do. The vast majority of drivers who use Uber tell us they want to remain their own boss as that’s the main reason why they signed up to us in the first place."
But Mr Field stated Uber's plans were "just another way of pushing costs onto the workforce".
The inquiry follows an employment tribunal ruling last year that found Uber drivers were wrongly classified as self-employed and should be classed as workers. The committee previously found many gig economy contracts to be ‘unintelligible’ and contain questionable clauses such as agreeing not to challenge their self-employed status in court.
By adopting a default status of ‘worker’, rather than ‘self-employed’, the committee believes companies would have to provide basic safety net standards of rights and benefits to their workers and present a case for not doing so, shifting the burden of proof of employment status onto the company rather than the individual.