Companies are forcing workers into bogus self-employment to avoid employment law, says Chair of govt review

Matthew Taylor, chair of the government's review into employment law in the gig economy, will include evidence in his final report that companies are forcing workers to take on roles as "self employed" people in order to avoid providing them with workers' rights.

21 Mar 2017| News

According to the Times, Taylor has discovered instances in which firms ask their staff to set themselves up as sole traders so that they do not have to pay them maternity pay or sick pay.

Workers misclassified as “self employed” also miss out on the right to the minimum wage, to holiday pay, and to rest breaks. Employers also do not have to pay into their pension pots or make National Insurance Contributions, thereby reducing the tax burden on businesses and depriving the public purse. The effects of this on government funding were highlighted when Chancellor Philip Hammond attempted to increase National Insurance Contributions on self-employed people to make up for an increasing shortfall, but he has since u-turned on this policy.

Taylor has said it will recommend changes to the law around self-employment when he publishes his review in June. He explained to ITV’s Peston on Sunday (19 March): “If you want to control your workers, you will have to respect their rights and provide entitlements, too, but if you really don’t want to control them, that’s fine, then they’ll be self-employed … but there look like there are cases at the moment where firms both want control but not to provide those workers with entitlements and rights,” according to the Guardian.

The Institute of Employment Rights (IER) argues that this is in fact already the law, as evidenced by GMB’s landmark case against Uber in Autumn 2016, where the panel found that the control exerted over “self employed” drivers actually meant they were fulfilling the duties of workers and therefore should be entitled to workers’ rights. What is lacking is enforcement of workers’ rights, and this is partly because the onus to enforce such rights is currently falling upon workers themselves. Rather than making workers responsible for protecting their own rights – especially in the face of powerful companies with much stronger legal resources than the average individual; and then charging workers for attempting to enforce their rights through tribunal, makes it very difficult for workers to ensure they are getting a fair deal.

Taylor appeared to suggest that workers need a stronger voice in the workplace, saying: “In the 21st century, a time when we have so much autonomy and choice and we expect control in our lives, we don’t accept the idea of kind of wage slavery, the idea of people at work having no choice, no voice, no capacity to influence what’s going on around them and I think people feel that doesn’t really fit with the times.”

However, with the government’s Trade Union Act now in place, trade union rights have taken another hit, weakening the ability of workers to collectively organise and thereby have a stronger voice in the workplace. The IER argues that the ability for trade unions to speak out against unfair practices in the workplace, and to negotiate for decent pay and conditions for workers, is key to workers having any kind of voice within their organisations, as it addresses the imbalance of power between staff and their employers.

Indeed, this was recently backed up by the UN’s Special Rapporteur on the rights to freedom or peaceful assembly and of association, Maina Kiai, who said: “The concentration of power in one sector – whether in the hands of government or business – inevitably leads to the erosion of democracy, and an increase in inequalities and marginalization with all their attendant consequences. The right to strike is a check on this concentration of power.”

In our Manifesto for Labour Law, 25 recommendations for the reform of labour law, the principles of which have been adopted by the Labour Party, we call for a universal status of “worker”, that would afford all people in employment access to the full suite of employment rights. We also call for an independent Labour Inspectorate to enforce employment rights and collective agreements, a free-at-the-point-of-use employment tribunal, and the promotion of collective bargaining at both sectoral and enterprise levels to allow workers to negotiate for fair pay and conditions. A key recommendation is that the Trade Union Act 2016 is repealed to allow trade unions the necessary leverage to bargain on behalf of workers.

Read more about the Manifesto for Labour Law and purchase your copy