The Work and Pensions and Business, Energy and Industrial Strategy Committees have published a joint report and draft bill to close the loopholes that allow companies to use bogus self-employment status as a route to cheap labour and tax avoidance, saying the law must not allow willingness to exploit workers to be a competitive advantage.
The MPs’ draft bill seeks to clarify the definitions of employment status. The proposed legislation would put the onus on the company to prove self-employed status in a dispute, rather than on the worker to do so through the courts.
The draft bill also proposes that companies should be legally obliged to provide all workers and employees with a clear written statement of their employment status on their first day of work, laying out their rights and entitlements.
The committees, both Labour led, have supported a large number of the recommendations contained in the government-commissioned Matthew Taylor review into modern employment practices.
Commenting on the draft bill, Taylor said: “This excellent report shows that whatever concerns the government has about my recommendations, parliamentary support is no longer a reason not to pursue them.”
Rt Hon Frank Field MP, chair of the Work and Pensions Committee, said: "The two committees are presenting the prime minister with an opportunity to fulfil the promise she made on the steps of Downing Street on her first day in office, with a draft bill that would end the mass exploitation of ordinary, hard-working people in the gig economy.
“The bill would put good business on a level playing field, not being undercut by bad business.
“It is time to close the loopholes that allow irresponsible companies to underpay workers, avoid taxes and free ride on our welfare system."
Rachel Reeves MP, chair of the Business, Energy and Industrial Strategy 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’ report recommends enabling class actions by groups of workers to establish employment status, making it harder for companies to suggest rulings only apply to individuals. It also proposes “punitive fines” for those who have previously been found to have broken employment law and “naming and shaming” for non-accidental breaches by businesses and supply chains.
The committees have also called for higher fines for employers found to have paid below the National Minimum Wage and National Living Wage.
The draft bill proposes asking the Low Pay Commission to test the idea of offering premium pay, above the legal minimum wage, to workers who do not have guaranteed hours.
It also proposes to abolish the Swedish derogation – a loophole that allows agency workers placed with companies to be paid less than direct employees, provided the agency agrees to continue paying them for at least four weeks at times when it is unable to find them work.