The Work and Pensions Parliamentary Committee inquiry report into self-employment and the gig economy has been published, which discusses employment status, rights and benefits.
The findings were published on May 1, after proceedings were cut short following an unexpected announcement made by Theresa May, calling for a snap election. The Committee gathered comprehensive evidence from gig-economy workers, self-employed professionals and businesses across the UK.
The report identifies how the line which separates the self-employed to permanent employees is becoming increasingly blurred, making it harder to define employment status. The Committee recognised that, “It is clear that current ways of categorising workers are creaking under the weight of the changing economy.”
Classifying workers as self-employed just because their contracts exclude employment rights, “puts the cart before horse”. If employment status was to be challenged in court, this defence would fail – a point that is stressed by the Work and Pensions Parliamentary Committee in the inquiry report.
It also covers the point that, “where there are tax advantages to both workers and businesses in opting for a self-employed contractor arrangement, there is little to stand in the way.” This point is foregrounded in the report and highlighted as a major factor that influences how employment status is defined.
The inquiry report found that as some gig-economy and self-employed workers are not entitled to employment rights, companies may “enjoy to deny workers the rights that come with employee or worker status.”
This “fails to protect workers from exploitation and poor working conditions”, which also leads to a loss to the public purse, which consequentially places a strain on the welfare state.
Self-employed professionals are not initially entitled to employment rights as a fixed-term employee would, unless stated otherwise. This aspect may appeal to clients as they may not be required to provide extra benefits and protection for workers, saving them money and time. As this is the case for many, Contractors and Freelancers may be required to form a War Chest to cover medical breaks, holidays, and paternity/maternity pay.
The government launched a review into employment practices for the self-employed, after recognising a need for change. The report is led by Matthew Taylor, to form the ‘Taylor Report’, which is expected to be published later this year.
Taylor told the Independent, “We’re not empowered to make tax recommendations but we are looking at why we have the model of work we have and it is clear that part of what drives this is the tax advantages of self-employed status.”
The Taylor report, put together with the inquiry report, is expected to function as a catalyst of change for self-employed professionals, and gig economy workers.
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