MPs accuse gig economy companies of “free-riding on the welfare state”

02 May 2017

MPs on the Select Committee for Work and Pensions have admonished companies within the so-called ‘gig economy’ for exploitating both workers and the public purse.

Firms such as Uber, Hermes, Deliveroo and Amazon that hire so-called “contractors” but exert managerial control over them are taking advantage of vulnerable workers, evading tax, and potentially creating an extra burden on the welfare state, the Committee’s final report states.

The government inquiry, which was curtailed due to the Snap Election, concluded that new legislation is required to ensure that firms take more responsibility for their workforce.

There should be an assumption of the employment status of “worker”, which comes with basic employment rights, rather than “self employed”, the Committee suggested, thereby putting the onus on employers to prove that their “self employed” contractors are indeed running their own businesses and have not simply been misclassified for the advantage of the company.

“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’,” Chair of the Committee Frank Field explained.

“It would also protect them from some of the appalling practices that have been reported to the Committee in this inquiry. Uber’s recent announcement that it will soon charge its drivers for sickness cover is just another way of pushing costs onto the workforce, to reinforce the impression that those workers are self-employed,” he added.

The Committee pointed out that the idea workers needed to be “self-employed” in order for both worker and employer to have a flexible relationship is a myth, adding that in most cases it seems the company is the one benefiting from this relationship, not the worker.

“It is clearly profit and profit only that is the motive for designating workers as self-employed,” Frank Field said.

“The companies get all the benefits, while workers take on all the risks and the state will be expected to pick up the tab, with little contribution from the companies involved,” he added, admonishing the firms for “free-riding on the welfare state”.