HR TALKING POINT: UK MP’s publish a joint report and draft legislation to combat vulnerability within the gig economy


Today Members of Parliament from two influential Commons committee’s (the Commons work and pensions committee and the Business, energy and industrial strategy committee) will publish a joint report and draft legislation designed to combat vulnerability within the gig economy – “A framework for modern employment”

The joint report highlights concern about the growth of a vulnerable workforce, and refers business models built around flexible work on digital platforms. The report calls on the Government to close loopholes “that enable dubious business practices”. Which it refers to as “companies using bogus self-employed status as a route to cheap labour”.

The focus is on providing security and stability to those who are vulnerable. The report suggests that a “wage premium” above the National Minimum Wage and National Living Wage on non-guaranteed hours could potentially help rebalance the benefits, and might prompt employers to consider offering more stable work: for example, by providing shift details and staff rotas in advance. The report also suggests ending the Swedish derogation.

Suggested key changes to the Employment Rights Act 1996

  • Worker status by default unless evidence of self-employment (suggested 1ZB) are for there to be a presumption of worker status unless there is evidence of self-employment; and
  • Statement of Status (suggested 1ZA) – that when an individual starts to work for another party, the individual should be given a written statement of status not later than 7 days after starting work which would contain a clear statement whether the individual is an employee or a worker. See below for the actual proposed wording.

Philip Henson, Partner and Head of Employment at ebl miller rosenfalck comments as follows:

The publication in July of Matthew Taylor’s report into the modern labour market has been a catalyst for debate about the gig economy and workers’ rights. The crucial point is that this draft bill has cross party support as the Committees include 10 conservative MPs’, 10 Labour MP’s and two members of the Scottish National Party.

The Committee’s proposals, show that there is now a clear impetus from law makers to update the statutory definitions of employee and worker. The draft bill suggests that there be worker status by default, and that “statements of status” be provided. The proposals would place the burden of proving that an individual is genuinely self-employed on companies.

Whilst I do not think that it will stop the ongoing gig economy case law (which shows no sign of abating in various forums) – for the time being – it shows that there is momentum for change, and the suggested changes might help to provide clarity to the workers/self-employed individuals, businesses and of course HMRC.

The joint report calls on the Government to increase the power and resources to the Director of Labour Market Enforcement (LME), so that it can “produce a real deterrent against non-compliance with the law”. For many companies, it will also be the first time that they have heard of David Metcalf, Director of Labour Market Enforcement. I anticipate that there will be an increased call to give the LME more teeth (in the form of enforcement powers and fines), and to raise the profile of the LME.

Should businesses be fearful these proposed changes? The Committee thinks not; if those businesses are “responsible”.

Suggested changes to the legislation (Employment Rights Act 1996) regarding status (my highlighting)

1ZA Statement of status

(1) Where an individual begins working for another party, that party shall give to the individual a written statement of status not later than seven days after the beginning of the work.

(2) The statement must contain —

    • (a) a clear statement of status, specifying whether the individual is –
      • (i) an employee; or
      • (ii) a worker
    • according to the definitions in subsections (1) to (3B) of section 230;
    • (b) details of the rights and entitlements of the individual by virtue of their status.

(3) The Secretary of State may make regulations requiring companies to publish information in relation to statements of employment and worker status.

1ZB Worker status by default unless evidence of self-employment

Where in any complaint made to an employment tribunal any question arises as to whether an individual is a worker, it shall be presumed that the individual is a worker unless the contrary is established”.

Links:

A full copy of the draft bill can be viewed here: https://publications.parliament.uk/pa/cm201719/cmselect/cmworpen/352/35209.htm#_idTextAnchor048

Reference to Labour Market Enforcement – the https://www.gov.uk/government/publications/labour-market-enforcement-strategy-introductory-report

            Philip Henson – 20 November 2017

            Ebl miller rosenfalck www.millerrosenfalck.com

            ph@millerrosenfalck.com

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