The Work and Pensions Committee has urged the Government to close loopholes that permit companies in the gig economy to engage in “bogus”’ self-employment.
The Committee had been assessing modern working practices and had questioned a number of high-profile companies operating in the gig economy (Amazon, Deliveroo and Uber amongst them). This work has now been suspended due to the impending general election.
Summing up the Committee’s findings so far, its Chair, Frank Field MP, accused gig economy companies of “free-riding on the welfare state” by evading all their responsibilities through bogus self-employment practices simply in order to maximise their profits. Ordinary taxpayers, he said, are left having to pick up the tab.
Workers’ rights are being undermined by the use of dubious self-employment models by these companies, the Committee declared, while the Government’s tax revenues are simultaneously being diminished, as these workers are not being taxed as employees.
Companies reliant on self-employed workforces have claimed that flexible working is contingent on self-employed status, but the Committee brusquely dismissed this as “fiction.” During questioning by Committee members, Amazon, Deliveroo and Uber all conceded that their business models would still be viable if they engaged drivers and couriers as employees. They may merely be less profitable.
Crawford Temple, CEO of the Umbrella Company trade body PRISM, noted that while technology has enabled the expansion of gig economy companies, the conflict between tax and employment status is by no means a new phenomenon.
The host of innovative new companies operating in the gig economy, Crawford observed, have merely highlighted shortcomings in the British tax system that in reality have been present for decades.
Because gig economy companies use technology and apps to enable workers to obtain assignments, they have been able to scale up at tremendous speed across broad areas. This development, Crawford noted, has focused the minds of tax officials, ministers, unions, workers and smaller competitors who have yet to embrace this new technology to the same degree. All are exercised by the fact that suddenly, they are confronted with rapidly growing companies capable of capturing vast market share exceptionally swiftly.
Yet, Crawford emphasised, very little has changed in reality. He explained: “In the contractor sector – often confused with the gig economy – we’ve had the opposite problem in the teeth of a lot of misunderstanding about how Umbrella Companies operate. The Government has stripped contractors of benefits enjoyed by the self-employed despite their patterns of work being similar and worker intention being the same. It is the system that recognises two types of tax status but three types of employment status that has to change.”