Law reform would ‘destroy gig economy’

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Nov 21, 2017
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Employers would face hefty fines for falsely classifying workers as self-employed


Fining employers for falsely classifying workers as self-employed would significantly alter existing law and could lead to the destruction of the so-called gig economy, lawyers have warned.

A committee of MPs has published a draft bill that they say would “close the loopholes that allow irresponsible companies to underpay workers, avoid taxes and free-ride on our welfare system”.

The House of Commons work and pensions select committee, which produced the proposals, claimed that imposing large fines on employers would ensure that “the risks of being caught outweigh the gains companies stand to make from illegal practices”.

Union figures welcomed the recommendations. Jason Moyer-Lee, the general-secretary of the Independent Workers Union of Great Britain, which has taken a series of claims to tribunals on behalf of gig economy workers, said the report was “definitely a step forward”.

He said that it “provides a refreshing focus on government enforcement of employment law in the so-called gig economy, something which is long overdue”.

However, the proposals met with strong opposition from some employment law specialists. Crowley Woodford, a partner at the City of London law firm Ashurst, said that they “would take a major step towards destroying the flexibility currently enjoyed by the gig economy”. 

The lawyer added that the “twin effect” of creating worker-by-default status and increasing penalties for non-compliance would mean that “the current self-employed model of engagement with labour, already challenged through the courts, would not survive”.

Helen Murphie, a partner at the London law firm Royds Withy King, argued that the proposals would “mean an additional financial burden for some businesses who have flexible workforces, which in turn may mean a hike in prices for the consumer. 

“Businesses will also face additional administrative and financial costs if they are obliged to provide written statement of terms, obligations and rights to workers in the future.”

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