The Work and Pensions, and Business, Energy and Industrial Strategy (BEIS) committees have published a joint report on their inquiry into the expansion of self-employment and business models built around flexible work on digital platforms, which says these changes create confusion about the rights and entitlements of workers, and add to the potential for exploitation of both current labour law and responsibilities for paying tax.

Rachel Reeves, chair of the BEIS committee, said: ‘Uber, Deliveroo and others like to bang the drum for the benefits of flexibility for their workforce but currently all the burden of this flexibility is picked up by taxpayers and workers. This must change.

‘We say that companies should pay higher wages when they are asking people to work extra hours or on zero-hours contracts.

‘Recent cases demonstrate a need for greater clarity in the law to protect workers. Responsible businesses deserve a level-playing field to compete, not a system which rewards unscrupulous businesses.

‘We need new laws but also much tougher enforcement, to weed out those businesses seeking to exploit complex labour laws, and workers, for their competitive advantage.’

The committees want to see primary legislation to introduce some of the suggestions of the recent Matthew Taylor review of working practices.

This would include legislation to introduce greater clarity on definitions of employment status, emphasising the importance of control and supervision of workers by a company, rather than a narrow focus on substitution, in distinguishing between workers and the genuine self-employed.

There should be a new presumption of ‘worker by default’, which would require companies to provide basic standards of rights and benefits to their workers—or prove that their working practices are genuinely reflecting of self-employment. This would apply to companies who have a self-employed workforce above a certain size defined in secondary legislation.

The report recommends that the government brings forward stronger and more deterrent penalties, including punitive fines, for repeat or serious breaches of employment legislation, and expands ‘naming and shaming’ to all non-accidental breaches of employment rights by businesses and supply chains.

It wants the director of labour market enforcement and the main enforcement agencies to undertake both reactive and proactive roles, including deep-dives into industrial sectors and geographic areas, and supply-chain wide enforcement actions. Where extra resources are needed, they should be funded through higher fines on noncompliant organisations.

MPs are also calling for an obligation on employment tribunals to consider the increased use of higher, punitive fines and costs orders if an employer has already lost a similar case, and enabling use of class actions in disputes over wages, status and working time.

A framework for modern employment is here.

Report by Pat Sweet