Crackdown on gig economy planned to help self-employed

Wednesday 26 October 2016

Companies like Uber and Deliveroo have made headlines thanks to their business model, which involves creating a centralised platform for a specific service - like taxi rides - that self-employed people can use to get work. They are often talked of as having created a 'gig economy' of workers taking a large number of small jobs, rather than signing on for one big contract.

However, is the gig economy a good thing? While some people have found it positive due to the increased flexibility it offers, many have pointed out that working for a firm like delivery company Hermes is not that different from being permanently employed, except with lower pay and fewer benefits.

It is for this reason that HM Revenue and Customs (HMRC) is creating a new unit that will specialise in investigating companies that make use of the gig economy. The aim is to crack down on businesses that exploit workers by unfairly classing them as self-employed to avoid paying tax or even a minimum wage.

Hermes is currently under investigation for exactly this. Several of its couriers have claimed they were paid less than the minimum wage by the firm due to this false self-employment.

Commenting on the issue, Edward Troup, executive chairman of HMRC, said: "We are committed to tackling false self-employment. Employment status in the UK is determined by the reality of the working relationship, not simply by the terms of any contract.

"Individuals cannot be opted out of employment rights and protections simply by an engager calling them ‘self-employed’."

If the government crackdown is successful, companies that use contractors may be forced to review how much they are paying their staff. If they are getting away with rates that are the equivalent of below minimum wage, or using contracts that treat self-employed workers like permanent staff, then they may have to change their business practices.

One of the main benefits of being your own boss is the ability to be flexible about who you work with and how you conduct business. As a contractor, you may have to abide by a company's rules and business culture while working on long-term projects for them, but overall you will have control of your work.
Being employed by a gig economy company is not like this, and has often been seen as all of the negatives of self-employment without any of the positives. Hopefully, an HMRC investigation will change this, preventing business practices like this from making their way into other aspects of contracting.

By Victoria McDonnell

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