The Government could introduce a new online questionnaire that assesses whether contractors are genuinely self-employed – or whether they should instead be entitled to greater working rights. This is one of the proposals being considered by an official review of Britain’s labour market, launched in response to the rise in so-called gig economy work at companies such as Uber and Deliveroo.

The Taylor Report

The Government’s review of modern employment practices is being led by Matthew Taylor, head of the Royal Society for the Encouragement of Arts, Manufactures and Commerce (RSA). The review was set up to examine the increasing take-up of “gig” working, and to ensure this form of employment – which is often undertaken on a self-employed basis – is fair to all parties.

This week, Taylor has said he is concerned some firms may be employing workers in this way solely to avoid paying tax. A new report from the TUC has found that the exchequer could be losing out as much as £4 billion a year because those in less secure work, and in particular their employers, are contributing too little when compared to what would have been paid in tax if the workers were employees.

According to the latest figures from the Institute of Fiscal Studies, permanent employees pay an effective tax rate of 31% on their earnings compared with 22% for self-employed people. The gap is largely down to different National Insurance treatment of the two groups.

The review is also looking at ways in which individuals can establish their “true” employment status, which may enable them to claim rights such as paid holidays or the ability to claim unfair dismissal. This could involve setting up an online service that looks at specific aspects of someone’s working practices – for example, their typical working hours, their freedom to work for other businesses, and their length of service – to determine whether they were in fact workers or employees of that particular company.

Recent court cases

A handful of recent court cases has brought the issue of employment status in the gig economy into the spotlight. Last year, an employment tribunal ruled that drivers for ride-hailing service Uber should be classed as workers and therefore be entitled to rights such as paid holiday and the national living wage, although Uber has since launched an appeal against the ruling.

Earlier this month, the Court of Appeal upheld another employment tribunal decision that a man who had worked on a self-employed basis for London-based Pimlico Plumbers should, in fact, be classed as a worker and entitled to certain rights. This ruling was based in part on the fact that the individual had operated exclusively for the company for more than six years and was effectively unable to offer his services elsewhere.

The employment practices review is due to publish its recommendations in the summer. The RSA review of government policy for the self-employed, supported by Crunch, was also recently published and will be submitted to the Taylor Review.

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