The Work and Pensions Parliamentary Committee inquiry into self-employment and the gig economy published a Report of its findings on 1 May. Although its proceedings were cut short by the calling of the general election, the Committee had already taken a substantial amount of evidence from both businesses and workers in the gig economy. The Report, which covers tax and welfare aspects of self-employment as well as employment status, concludes that designating workers as self-employed because their contracts do not offer any of the benefits of employment "puts the cart before the horse" and that this not only fails to protect workers but also leads to tax losses and potential strains on the welfare state. The Report lists some of the practices that it sees as blurring the line between employment and self-employment:
- control by the contracting company over working patterns, such as assigning shifts/rounds with the risk of work being permanently withdrawn or charges levied if these shifts are not fulfilled;
- workers who carried out regular working hours for one company over very substantial periods of time;
- inability for individuals to negotiate or set pay;
- difficulties in getting “substitutes” accepted by the company;
- guidance given to salaried staff on how to avoid referring to their workers in terms that might imply an employer/employee relationship.
The Report points out that although questions of employment status are often resolved in court, what applies to one company does not necessarily have any implications for those working for other organisations, even if they have very similar business models. There is, the Report concludes, "a substantial burden on workers if they wish to challenge their status: one that those in vulnerable or isolated positions may be very hesitant to bear." The Report's two main employment law proposals are:
- There should be a presumption of "worker" status (with the accompanying employment rights and protections), rather than the current position of self-employment by default. As there is no “worker” status in tax law, tax status would be unaffected. Businesses wishing to deviate from this model would need to present the case for doing so, in effect placing the burden of proof of self-employed status on the "employer". The Report's conclusions do not specifically limit this proposal to workers in the gig economy.
- The incoming government should "set out a roadmap" for equalising the National Insurance contributions made by employees and the self-employed.
The Taylor Review, expected to report later this year, is covering much of the same ground and it would be a surprise if it did not recommend change along similar lines.