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Commons committee report on ‘gig economy’ employment status

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The House of Commons work and pensions committee has called on the incoming government to set out a roadmap for equalising the NICs of employees and the self-employed. The committee’s report, Self-employment and the gig economy, follows an inquiry which took evidence during February and March from witnesses including representatives of companies such as Uber, Amazon, Hermes and Deliveroo (see http://bit.ly/2pl0kgG).

The committee recommends a default employment status of ‘worker’, rather than ‘self-employed’, which would leave tax status unaffected, while providing basic employment rights. The burden of proof for deviating from this status would fall on those companies who, the committee argues, are responsible for promoting the ‘myth’ that flexible employment is contingent on self-employed status.

According to the report, the introduction of the new state pension has removed the last major difference between the entitlements of employees and self-employed, making it difficult to justify differing rates of NI contributions to the welfare system based on employment status.

The report stresses that self-employment is ‘neither inherently good nor bad’, but argues that government should close loopholes that incentivise companies to evade responsibility for their workers’ wellbeing and increase their profits.

The committee accuses companies that rely on self-employed workforces of promoting the ‘myth’ that flexible employment is contingent on self-employed status. Arguing that people on employment contracts can and do work flexibly, Frank Field MP, chair of the committee, said: ‘companies in the gig economy are free-riding on the welfare state’.

The practice of designating workers as self-employed because their contract offers none of the benefits of employment is described by the committee as putting ‘cart before horse’. The report notes that individuals face ‘huge risks’ in challenging their self-employed status in the courts, but ‘there is little to stand in the way’ of opting for a self-employed contractor arrangement where there are tax advantages to both workers and businesses.

A key recommendation of the report is an assumption that employment status should be ‘worker’ by default, rather than ‘self-employed’ by default. Such an assumption would entitle workers to employment rights commensurate with ‘worker’ status. As there is no ‘worker’ status in tax law, tax status would be unaffected. Companies wishing to deviate from this model would need to present the case for doing so, in effect placing the burden of proof of employment status on the company.

Frank Field said of workers in the gig economy: ‘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’.’

Issue: 1352
Categories: News
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