Legislation expert from MHR says organisations need to prepare for cost implications and reduced supply of available labour.
Leaked government plans to protect the working rights of people operating in the gig economy will help to stop employers from exploiting low-paid workers by stamping out false self-employment but it is questionable whether it goes far enough, according to a legislative expert from leading HR and payroll company MHR.
Plans revealed earlier this month suggest the government plans to adopt a number of the 53 recommendations made by the July 2017 Taylor Review into modern working practices.
As part of the proposals to give gig economy workers better worker protection the government plans to introduce new legislation to determine self-employed status by aligning tax and employment law.
Neil Tonks, legislation expert at MHR says: “The tax and employment law definitions of worker status have always differed and caused a lot of confusion. If the government aligns them, as has been leaked, the proposals could help to protect the employment rights of gig workers.
“However, I think there was a missed opportunity for wider reform. The government is treading very carefully because it doesn’t want to kill off the gig economy completely, but neither does it want the UK to have a reputation for exploitative working practices, which is what’s been happening. It’s a balancing act between ending the worst exploitation and stifling growth and innovation by making the labour market too inflexible.”
The government has been under growing pressure to clarify the employment status of gig workers following a number of high profile tribunals brought by workers claiming to be entitled to workers’ rights.
Under the proposals workers will also be granted the right to request temporary or fixed-hour contracts after 12 months of employment, while specific terms of employment such as notice periods and cancelled shifts will be considered to address ‘one-sided flexibility’.
Tonks adds: “While on paper granting people the right to request temporary or fixed-hour contracts after 12 months of employment seems fair and reasonable, the fact that companies are not required to grant contract requests means they could say “no” every time. It’s inevitable that there will be a flurry of legal cases to test the boundaries of the new definition when it is first introduced.”
As well as seeking clarifications of the finer details, Tonks says employers also need to be mindful of the potential cost implications of the proposed plans and its impact on available talent.
“If people currently classed as self-employed become workers or employees, they could acquire employment rights such as paid holidays, sick leave and statutory maternity pay, while National Insurance contributions might also need to be calculated and paid. It all depends on how far it goes and which rights these individuals actually gain, but organisations will almost certainly see a rise in cost,” adds Tonks.
“There’s also the potential for the proposals to affect the supply of available labour. Although the gig economy has been tarnished with a bad reputation, we need to remember that some gig economy workers choose to work in the sector because they like the flexibility it gives them and might not want jobs which give them less flexibility over their working hours. If this is the case then many employers may see a reduced pool of workers from which to choose, meaning they will have to adapt their business accordingly.”