back to article Gig economy tech giants are 'free riding' on the welfare state, say MPs

MPs have slammed the "bogus" self-employment practices of so-called gig economy companies – accusing the likes of Uber, Amazon and Deliveroo of passing the buck on to the welfare state. In a report published on Monday, Parliament's Work and Pensions Committee urged the British government to close loopholes exploited by gig …

  1. Chris G

    A long time coming

    A government report ( or commitee) that actually speaks the truth and makes some sensible suggestions.

    Other governments should take notice.

    1. Voland's right hand Silver badge

      Re: A long time coming

      It is a temporal pre-election anomaly while they are looking for some votes (and in the labor case money from the Unions). Do not worry, it will pass.

      1. Anonymous Coward
        Anonymous Coward

        Re: Whats this GUI thingy?

        To be fair, Frank Field is normally pretty good (and consistent) on this sort of thing. There's very few MP's I'd consider honourable (for at least some version of honourable), but Frank Field is one of the few.

        There's a few good reasons why he's never held senior cabinet office:

        1. He tends to say what he thinks, though not quite as forward as The Beast of Bolsover.

        2. He knows what he's talking about. This is a massive drawback as most cabinet ministers are clueless. I point out Amber Rudd, the PM and IDS as perfect examples.

        3. He thinks through things and comes up with solutions that people don't like, because they tend to be thought through but also because they cost money. Most cabinet ministers are there to save money for the election.

        When Frank speaks, its usually a good idea to listen. You may not like what he says, but he's not often wrong.

      2. streaky

        Re: A long time coming

        It is a temporal pre-election anomaly while they are looking for some votes (and in the labor case money from the Unions). Do not worry, it will pass.

        Nope. This report has been a long time in the making and is not related to the election. These companies are doing active harm to the state's budget. Employees don't care because they're covered by the state and obviously the companies are getting away with bloody murder.

        Both left and right understand this is a problem - I'd expect to hear more about this long after the election.

        1. John Smith 19 Gold badge
          Unhappy

          "These companies are doing active harm to the state's budget. "

          Corerect.

          Their behavior is in fact trebly despicable.

          1)Rely on the welfare state to cover for anything outside basic pay.

          2)Avoid paying their taxes

          3)B**ch continuously about how taxes are too high, they are over regulated yadda yadda.

    2. Commswonk

      Re: A long time coming

      Other governments should take notice.

      Never mind other governments; this government should take notice, along with the winner on 9th June.

      1. bazza Silver badge

        Re: A long time coming

        "Never mind other governments; this government should take notice, along with the winner on 9th June."

        And I think they will - I'm guessing there's a ton of PAYE they're not getting as a result of delivery drivers, etc, being "self employed" (translation: disenfranshised slaves). And I wouldn't mind betting that a lot of people doing jobs like this also qualify for a load of benefits owed to those on low wages; from the government's budget point of view it's far better to get these people working on proper and humane full time employment contracts with at least the minimum wage.

        Basically, if they work out that the tax payer is subsidising Amazon, Uber, etc whilst not receiving adequate tax from such companies, they'll start to act. It will take time - see below. And there's some precedent; Mark Carney told the bank that he would not support them if they were "socially useless". That put the heebbie geebbies up them. Ok, so he's not the government, but it's encouraging to think that there's limits to the extent to which national bodies will tolerate corporate behaviour.

        Plus, to take it away from the seedy realms of politics, it's looking like the employment tribunals don't particularly like the "gig economy" either (ref: Uber vs drivers). The judgement of the tribunal is made against employment law background which, so far as I know, enjoys unchallenged cross party support (at least on the parts relevant to the recent tribunal).

        In my view it would be good if there was a general law to prohibiting this kind of thing. We already have specific laws, but the enforcement route is problematic - it takes an employment tribunial in each case. It's difficult to prohibit (in the general sense) "self-employment" without cocking up, for example, the arrangements for a one-man-band-IT-contractor. Getting this right will take time...

    3. Fihart

      Re: A long time coming

      Unfortunately, it's not just the disruptive new economy's low wages that exploits the welfare state. For example, supermarkets employ thousands of young mothers in poorly paid part-time jobs (necessarily because they have to look after kids out of school hours). Benefits, especially housing benefit, make up the difference. Food shops depend on cut-throat pricing and we consumers won't pay more.

    4. John Smith 19 Gold badge
      Unhappy

      Re: A long time coming

      And I see we have a serial downvoter here.

      Some apologist for Uber?

  2. tiggity Silver badge

    Conflict

    Awkward as Conservative poilcy for ages has been to hammer worketrs and make UK a low skill, low wage economy - hence doing nothing to stop the precarious "employment" issue of zero hours contracts & quite happy with fake self employed status as (ab)used by some of their big mates in the building industry - only reacting as the self employed abuse is being used by more and more companies & shock horror some of these companies are not their cosy donation / jobs for the boys / girls mates.

  3. Neil Barnes Silver badge

    Finally someone's noticed?

    It's been obvious for years that companies who insist that their 'employees' are free-agent contractors are doing it mostly to avoid the legal requirements of an actual employment contract with all the rights and requirements that this would encapsulate. Y'know, the little things that hardly matter like sick and holiday pay, job security, pensions and the like. Things like requiring these 'contractors' to pay consolidated damages when they can't provide their contracted service is surely only a courtesy detail...

    But it has the wonderful advantage that it's not the company that's underpaying their 'employees'; it's their 'contractors' who aren't working hard enough, or who have failed to negotiate a suitable rate - and of course it's the 'contractors' who are blamed because they suddenly have to go cap in hand to the welfare state. It's not the company's fault, naturally...

    That someone in full-time employment, no matter how it is disguised, requires state aid to live is unjust, inequitable, unfair, and a damned disgrace. The sooner this sort of employment is at least severely curtailed, the better.

    1. Anonymous Coward
      Meh

      Re: Finally someone's noticed?

      Or maybe just "finally there is an election on", so they all have to look good until polling day.

      1. Charlie Clark Silver badge

        Re: Finally someone's noticed?

        Or maybe just "finally there is an election on", so they all have to look good until polling day.

        After which the regulations will no doubt be reduced even more.

      2. Dan 55 Silver badge

        Re: Finally someone's noticed?

        Frank Field usually talks sense, but if he's actually listened to is another thing entirely...

      3. JimC

        Re:all have to look good until polling day.

        Abosolutely not. Because here is a policy change that looks good socially and increases the tax take. Every politicians dream.

        The down side is that self employment is going to get more and more heavily cracked down on. IR35 will be only the start.

        1. Anonymous Coward
          Anonymous Coward

          Re: Re:all have to look good until polling day.

          IR35 does not apply to the self-employed, because by definition there must be an employment relationship in place to be subject to employment intermediary tests. Thinking that you're self-employed when you're employed by your own company is usually a good sign you're in breach of IR35.

    2. Anonymous Coward
      Anonymous Coward

      Re: Finally someone's noticed?

      That someone in full-time employment, no matter how it is disguised, requires state aid to live is unjust, inequitable, unfair, and a damned disgrace. The sooner this sort of employment is at least severely curtailed, the better.

      Amen to that. The problem is that the fines and punishments never quite hit where they should. If a court could convict the CEO and board to live like their workers for a year, on the same pay and in the same conditions, I reckon it would be addressed before you'd finished reading this post..

      1. Not also known as SC
        Meh

        Re: Finally someone's noticed?

        "but it has the wonderful advantage that it's not the company that's underpaying their 'employees'; it's their 'contractors' who aren't working hard enough, or who have failed to negotiate a suitable rate - and of course it's the 'contractors' who are blamed because they suddenly have to go cap in hand to the welfare state. It's not the company's fault, naturally..."

        Remember if a company's workers are claiming state benefits then the tax payer is also subsidising that company. The company involve are not only dodging their tax obligations, they're getting labour part paid for by the government instead of paying the full 'market' rate.

        1. Anonymous Coward
          Anonymous Coward

          Re: Finally someone's noticed?

          "Remember if a company's workers are claiming state benefits then the tax payer is also subsidising that company."

          In the same way, housing benefit is basically a transfer of taxpayer money to private landlords. It arises because people are not being paid enough to afford rents, but also the existence of housing benefit tends to drive up house prices and rents.

          If people were adequately paid there would be no need for housing benefit, which means a market distortion would be removed and rents would be a free market that the Conservative Right are so in favour of, would they?

          (But they don't want free markets, of course. They just want markets in which it's their thumbs on the scales, not someone else's.)

          1. Pompous Git Silver badge

            Re: Finally someone's noticed?

            "housing benefit is basically a transfer of taxpayer money to private landlords"
            That depends. Here in Oz Centrelink pay the rent subsidy to the tenants. The tenants use the rent subsidy to purchase drugs and the landlord ends up evicting the tenants after a long battle to be allowed to do so. Yes, this ends up driving up rents, but that's what the government in its wisdom appears to want. That and cheaper drugs.

  4. Anonymous Coward
    Anonymous Coward

    'worker' status to the drivers

    I would applaud that. In real world however, this will only speed up - the inevitable - shift to "autonomous" driving vehicles and the welfare state will pick up the tab anyway.

    Has ANYONE really counted what the likes of amazon and google have EVER done to us, other than being disruptive? Because they waffle on about 1,000 employed employed here and there, while at the same time f... the budget royally. Somehow I don't think a few thousand people being (self)employed make up for this.

    1. joed

      Re: 'worker' status to the drivers

      On one hand yes. On the other hand this trend would be even faster as businesses can invest more into "R&D" while they don't have to spend on workers. It's about greed after all.

      I'm trying to limit my spend on Amazon and other to big to fail corporations (no need for Uber or alike) as I don't see the need to support them unless necessary. Sometimes it's inconvenient but even then it's simply money saved.

    2. Halfmad

      Re: 'worker' status to the drivers

      Autonomous vehicles will need R&D and more frequently - maintenance. You can also bet your behind that the government will come up with new ways to extract money from them in new taxes etc.

  5. David Roberts
    Windows

    Time for a turnover limit on IR35?

    Bogus self employment has been a target for decades where minimum wage slaves are forced to be "self employed" to save money for their "employers".

    This has had an impact on those (a much smaller number) higher up the value chain, such as IT consultants and radiographers.

    So it is probably time for a new set of guidelines for those above a certain billing point. This would allow different treatment for those earning enough to fund their own training, healthcare, holidays etc. and protect those who are paid so little they can't afford to be sick.

    Difficult to pick a cutoff point - perhaps a multiple of the living wage?

    Rough calculation (not minimum/living wage): £5 an hour for 8 hour day for 200 days a year gives you £8,000 a year. Three times that rounded up gives you £25k a year. Possibly a cut off point? If you are billing over £100k a year you probably don't need protection from modern day slavery.

    1. Tom 7

      Re: Time for a turnover limit on IR35?

      "If you are billing over £100k a year you probably don't need protection from modern day slavery." I'd imagine there will be people billing over that but after overheads will taking home less than the living wage it their 'employers' can work out ways of loaning them the money for cars, being off sick for a day etc etc.

      1. Neil Barnes Silver badge

        Re: Time for a turnover limit on IR35?

        https://www.youtube.com/watch?v=L2tWwHOXMhI

      2. Anonymous Coward
        Meh

        Re: Time for a turnover limit on IR35?

        Time for scrapping IR35. People are either employees or they are not.

        It was intended, nearly 20 years ago, as a tax-grabbing wheeze - let's call these bastards "disguised employees" so we can tax them as employees, but we won't give them any of the rights associated with employment.

        Either you are a "disguised employee" - i.e. you are just an employee, but wearing dark glasses and a hat - and so you and your employer get all the rights and duties associated with employment, or you are not an employee - disguised or otherwise - in which case you and your client get neither.

        1. Anonymous Coward
          Anonymous Coward

          Re: Time for a turnover limit on IR35?

          IR35 is to stop the tax dodging bastards, not a tax grabbing wheeze. Down vote away you hive of consultancy scum.

          1. Doctor Syntax Silver badge

            Re: Time for a turnover limit on IR35?

            "IR35 is to stop the tax dodging bastards"

            If you think it's just a tax dodging wheeze why aren't you taking advantage of it yourself? Would it offend your moral principles or don't you fancy the risk of stepping off the edge of permie status? If the latter then you might like to reconsider and wonder if may there's something in this notion of freelancers being businesses and being a business not the same as being employed?

  6. Timbo

    Definitions of employed/self-employed ?

    I always thought that the distinction between "employed" and "self-employed" was along the lines of:

    "Employed" - you work for someone else in "their" company (either full time or part time)

    "Self-employed" - you work for "your own" company (even if providing services to someone elses company)

    So, drivers for Uber et al should be called "Employed" as they are working for someone elses' company. In theory, by my own definition, Uber drivers could be working for themselves, but providing "services" to Uber.

    In which case, I would further refine the above to:

    "Employed" - you work for someone else (exclusively) in "their" company (either full time or part time)

    "Self-employed" - you work for "your own" company (and/or you are providing non-exclusive services to more than one company belonging to someone else)

    1. Dan 55 Silver badge

      Re: Definitions of employed/self-employed ?

      There are three, employed, self-employed, and worker. A worker covers all employed and some self-employed (usually when they are being exploited, like Uber drivers).

    2. Anonymous Coward
      Anonymous Coward

      Re: Definitions of employed/self-employed ?

      When I win the election, I'll insert a 'living wage' section in the law on unfair contracts. Any organisation that contracts a service at a rate that won't pay the contracted staff/person the living wage + pension/holiday costs in respect of the work done (calculated hourly, and appropriate to where the work is carried out) is subject to a fine of 100% of the CEOs salary and bonus, per offence.

      At a stroke we sort out the 'unfairness' of the gig economy, care firms not paying travel time, and sweat shops in the 3rd world paying slave labour rates.

      So vote anonymous, vote often!

      1. Anonymous Coward
        Anonymous Coward

        Re: Definitions of employed/self-employed ?

        what's a holiday?

        1. Pompous Git Silver badge

          Re: Definitions of employed/self-employed ?

          "what's a holiday?"
          Retirement! :-)

          1. hnwombat
            Unhappy

            Re: Definitions of employed/self-employed ?

            >>"what's a holiday?"

            >"Retirement! :-)"

            What's retirement?

          2. hnwombat
            Unhappy

            Re: Definitions of employed/self-employed ?

            >> "what's a holiday?"

            >Retirement! :-)

            What's retirement?

      2. This post has been deleted by its author

    3. Lotaresco

      Re: Definitions of employed/self-employed ?

      "Employed" - you work for someone else in "their" company (either full time or part time)

      "Self-employed" - you work for "your own" company (even if providing services to someone elses company)

      Not really. If you work for your own company you are "Employed" (by the company which is a legal entity). Directors are employees.

      "Employed" you don't have to work for a company. You could be employed by a partnership or sole trader, neither of these are incorporated. You could even be employed by a non-trading individual (i.e. as a nanny, cleaner, groundskeeper etc.)

      Self-employed in most cases means in a partnership with someone else or operating as a self-employed sole trader.

    4. I am the liquor

      Re: Definitions of employed/self-employed ?

      It should be easy to tell the difference between employment and self-employment: are you free to accept or decline jobs at your own discretion, without facing sanction from someone else? And do you set your own price?

      If you get offered a job to tile the bathrooms on the Death Star, and you can say "No thanks, that job's not for me," or "OK but it'll be twice my normal rate," then you may be self employed.

      If you get told to pick up a big guy in a cape and drive him to the Death Star, and you have to take the job because the Death Star is in your area and Uber will de-list you if you refuse it, even though the tolls on the Yavin bypass make it completely unprofitable, then you're Uber's employee.

      1. Anonymous Coward
        Anonymous Coward

        Re: Definitions of employed/self-employed ?

        "are you free to accept or decline jobs at your own discretion..."

        It's actually a bit more detailed than that. If you're not free to work to your own direction (e.g. you are integrated into a single delivery team with loose terms of reference) or you're not free to be replaced by some other similarly qualified resource you are almost certainly an employee in fact.

        1. Anonymous Coward
          Anonymous Coward

          Re: Definitions of employed/self-employed ?

          "replaced by some other similarly qualified resource you are almost certainly an employee in fact." Not in the US. I'm an independent contractor and I have a clause in my contract that says no substitutions. Other than that I'm free to take jobs/decline,negotiate prices say were I want to work

          1. Doctor Syntax Silver badge

            Re: Definitions of employed/self-employed ?

            "Not in the US. I'm an independent contractor and I have a clause in my contract that says no substitutions."

            That's an interesting situation. It seems to be established in UK case law that that would be an indication of employment. And yet the IR themselves, as they then were, had a sample contract on their website at one time for companies to supply services to themselves. It made provision for them (a "key man" clause) to nominate individuals on the suppliers team who could not be replaced without the IR's agreement. It was a sensible clause given the tendency of big services company to put forward a high powered team to make the pitch and then run the contracts on recent graduates, YTS trainees or work experience kids if they could get away with it. But when does a key man clause in a contract for services become a non-substitution clause that marks the contract as a disguised employment contract?

            1. Anonymous Coward
              Anonymous Coward

              Re: Definitions of employed/self-employed ?

              "But when does a key man clause in a contract for services become a non-substitution clause that marks the contract as a disguised employment contract?"

              The difference with a typical services engagement is that the people covered by "key man" clauses are bona fide employees of the company delivering the services, with NICs, income tax, sick pay and holidays fully accounted for. While the contractual relationship may be indicative of employment, the point is moot as there is no attempt to act as an employment intermediary. They also usually have their own lines of reporting and management, further distancing them from the client's organisation.

              Remember the purpose of IR35 is to identify and tax people trying to disguise what is an employer-employee relationship as something else (e.g. services delivery contract).

              There are also other "outs" from an employment relationship. A common one being well-defined terms of reference. If you are engaged for a specific task and solely act to deliver that task within a well defined scope, upon which the relationship is terminated, you are almost certainly not an employee. This covers the genuine specialist use case of a short term (<3 month) deployment of some niche skill. In that scenario you could well be a "key man" but you're not an employee because you're being paid for a concrete deliverable rather than just your time.

              Start repeating that 3 months contract like clockwork every 3 months for an extended period and the situation changes.

              tl;dr don't do long-term T&M "as directed" engagements and you're fine.

              1. Doctor Syntax Silver badge

                Re: Definitions of employed/self-employed ?

                "But when does a key man clause in a contract for services become a non-substitution clause that marks the contract as a disguised employment contract?"

                The difference with a typical services engagement is that the people covered by "key man" clauses are bona fide employees of the company delivering the services, with NICs, income tax, sick pay and holidays fully accounted for.

                A company is a company to paraphrase someone or other irrespective of size. Therefore there should be no reason to take a substitution clause as equivalent to a key man clause.

                The primary problem with IR35 determination is that although it's supposed to be based on the balance of probabilities it doesn't consider the probability of the contract being what it states itself to be, a contract for provision of services. If a clause would be unexceptional in a contract with, say Capita, for provision of services then it should be equally unexceptional in a contract with VerySmallFreelanceCo. And that goes with "as directed", long contracts or any other clause. Why should the individual service provider be discriminated against relative to the Capitas of this world?

                The entire assumption of IR35 is that there is such a thing as a disguised employee. And yet if you take into account the way in which the freelancer relates to the engager it differs in many respects from an employee. If a freelancer is asked - or told - to work on such and such a task today does that make him an employee? You think so? OK, you engage a sparky to change a single socket for a double in your living room; does that make him an employee because you told him which particular socket to change?

    5. Seajay#

      Re: Definitions of employed/self-employed ?

      The way uber see it, the drivers are self-employed minicab drivers. The drivers are contracting Uber to provide them with a dispatch and billing service. To be honest, that seems like a fairly reasonable interpretation of the rules to me and it is stuff which has been going on for a long time. Uber just happen to have put a hi-tech face on it.

      For example, Anne Summers party hosts also count as self employed rather than as salespeople for Anne Summers (which is clearly what they are). If we're going to insist on uber drivers counting as employees then we need to count them as employees too (and people running Costa Coffee franchises, and Weight Watchers groups, etc, etc). Maybe that's a good idea, maybe it isn't but either way I don't see this as an uber problem or as a new problem.

      1. kain preacher

        Re: Definitions of employed/self-employed ?

        Uber fails for two reasons. 1. You can not set the price or negotiate the price. 2. You can not decline jobs.

    6. Doctor Syntax Silver badge

      Re: Definitions of employed/self-employed ?

      "Employed" - you work for someone else in "their" company (either full time or part time)

      "Self-employed" - you work for "your own" company (even if providing services to someone elses company)

      No. Self-employed is a fairly specific thing however much the HMRC try to muddy the waters.

      If you're self-employed you can provide a service or trade goods and the money that the customer pays is your personal money. You may, however, have liabilities such as tax and NI and the ability to set your expenses against the income before taxes are levied. You'll also have liabilities for any other costs you incur and those liabilities fall directly on you, personally. You are the business; there's no distinction. You could, for instance, buy a bucket, a ladder and some cleaning materials and set up as a self employed window-cleaner tomorrow. If nobody wants their windows cleaned or you go on holiday or fall sick, tough. There's no money coming in and your only fall-back is on the dole under whatever name it's going ATM.

      What I've just described is a sole trader. Another variation is a partnership. You can go into partnership with someone else with two buckets and two ladders as a window cleaning partnership. Much the same applies. Any money you take becomes your joint property as partners and it's up to you to divvy it up but you still have personal liabilities. In fact those liabilities are on both of you for the actions of either - your partner screws up and you could still be liable for whatever it costs.

      An employee doesn't receive money that's paid for the whatever the business delivers. The business, whether it be a sole trader, a partnership, a limited company, a PLC, a charity or a public sector receives the money and pays the employee. The employee will have to pay income tax and NI although the NI rates are different and there's also an employer's NI to be paid. The employer will also have to find sick pay and holiday pay. The business and the employee are two separate entities. One thing that should be made clear here is that if you're in business as a self-employed window cleaner the your customers are just that, customers; they're not your employers.

      There's no real obstacle to a company engaging a specialist worker (to use a generic term) on a self-employed basis. There is, however, a risk and that's a ruling some time ago that if the sole trader were to default on tax payments the IR (as it then was) could look to the engager (again, to use a generic term) to make good. This, AIUI, was what brought the limited company freelancer to the fore; clients were more likely to be comfortable dealing with a limited company rather than a sole-trader as the ruling did not apply to a worker engaged on that basis. It's not essential to structure the arrangement through a limited company. I came across a client who, I discovered, engaged graphic designers as sole traders and they actually had their own form contract for this.

      It should be clear from the above that when a freelancer works through a limited company they are not self-employed. It is the company that is the business that receives payment from the client. The company has its own tax liabilities such as corporation tax and employees NI and its own rules about expenses. It's up to the company's management and ownership (who are probably identical with the employee(s)) to decide what payments it makes to its employee(s), subject, of course, to any limits on what it can afford and company legislation about solvency. It also needs to distribute salary payments through sickness, holidays and slack periods. As a company, of course, the business is subject to a good deal more legislation than the sole trader. It needs to go through the necessary legal formalities to be incorporated and it needs to produce the appropriate annual accounts to submit to Companies House. It has more freedom to distribute income as dividends, which have their own taxation arrangements, as well as salary and to retain some of its income when things are going well in order to be able to make payments when they're not. It is also the company which assumes any liabilities and not the employees.

      For a small company the same person might be shareholder, management and employee. Nevertheless they are separate roles unlike the sole trader where the person is the business.

      NB Occupations which are regulated create exceptions. Anyone can set up as a self-employed window cleaner but not as a self-employed medical practitioner unless they have the appropriate qualifications and registrations. OTOH there may be instances where the professional is obliged to bear personal liability even if they are an employee although the employer may pay for professional liability insurance.

  7. Buzzword

    "it is up to government to close the loopholes"

    At last a report which doesn't blame the companies themselves, but places the blame squarely at the foot of the government for not closing the loopholes in the first place.

    1. DavCrav

      Re: "it is up to government to close the loopholes"

      "At last a report which doesn't blame the companies themselves, but places the blame squarely at the foot of the government for not closing the loopholes in the first place."

      So if there's a loophole in the murder law that let's me kill you, and I did, that would be the Government's fault as well? It#s the Government's fault for not closing the loopholes and it's these companies' fault for being absolute bastards. It's not a legal requirement for firms to be twats, the whole maximize profit law thing is a lie, as in it doesn't exist.

      1. Buzzword

        Re: "it is up to government to close the loopholes"

        Companies which don't exploit loopholes get out-competed by those which do.

        The broader point is that you can waste your breath shouting at people to change their behaviour; or you can legislate for it. Legislation is far more effective.

        For example, consider car seat belt usage. Across the United States, 89% of drivers use their seat belt. But in New Hampshire the figure is just 70%. Why? Because the state doesn't have laws on seat belts for adults. You can huff and puff all you like at the remaining 30%; but you'll get a much quicker result by simply legislating for seat belt use.

        Worse still, by wasting your breath shouting at Uber, you're letting thousands of smaller, lesser-known companies get away with exploiting loopholes. If you campaign to get the law changed, you fix the problem for both big well-known companies and thousands of smaller ones too.

    2. Just Enough
      Devil

      Re: "it is up to government to close the loopholes"

      Ah yes. Corporate's favourite excuse.

      "It's not our fault we hide our profits through umpteen different bank accounts/sub-companies/countries! It's the loopholes we found in the Government's tax policies that are making us do it!"

      "It's not our fault we treat our workforce as disposable peons with no employee rights! It's the loopholes we found in the Government's employment policies that are making us do it!"

      "It's not our fault we're heartless, ruthless capitalists, grinding our workers down and diverting profits into our pockets. We found loopholes in the law that allows us to do it, so therefore we must!

      "For pity sake, we're the victims here! It's up to the Government to save us from this enforced evil-doing!"

  8. Nifty

    So if a sole trader does 100% of their business through Ebay (which is the resident monopolist agent between supplier & customer), they become an employee of Ebay?

    1. Anonymous Coward
      Anonymous Coward

      If eBay sets the price that they can sell at, makes them wear an eBay uniform, and charges them for the 'cost' of providing someone else to sell their tat when the sole trader is off sick, then they would be an employee of eBay.

    2. Anonymous Coward
      Anonymous Coward

      You mean if I rent a shop to sell my stuff I'm an employee of the renter? Uber and EBay are quite different business models.

      If Uber was based on drivers paying only, for example, a weekly/monthly/yearly fee to promote their services, probably would be different - but Uber directly sells the "taxi" service and takes a not little share of the driver income. Uber would like you to believe it's like EBay, but it is not. Especially it it sets the fares - EBay sellers set the price.

      Also, if EBay took 20% of every sale, it would be already out of business.

    3. Anonymous Coward
      Anonymous Coward

      There's all sorts of stuff that goes into whether you are in our out of IR35. I'm held up on a contract whilst govt tries to work it out.

      Its not as simple as all your business goes through eBay, there's lots to do with who controls your day, do you manage people, provide your own tools, decide when you have holidays, responsibility if something goes wrong etc etc.

      Simple solution though for govt work is we put the contract up by 20% and for non govt work, we drop it by 20%. So the govt pays more, but it goes straight back to HMRC and its a simple transfer. Govt stupidity at its best.

    4. KBeee

      No, in the same way as a sole trader using only Dover Boot Fair isn't an employee of Dover Boot Fair.

    5. Anonymous Coward
      Happy

      Ebay

      So if a sole trader does 100% of their business through Ebay (which is the resident monopolist agent between supplier & customer), they become an employee of Ebay?

      To be an employee you must be in a master/servant relationship in which you must do whatever your master tells you provided it is legal. e.g. If they tell you to clean their car, then you must do that even if it isn't part of your job description. I don't see trading through Ebay is like that, any more than running a market stall makes you an employee of the local council who rents you the pitch.

      1. Seajay#

        Re: Ebay

        But if you use that "Master/Servant" relationship as the basis for deciding if someone is an employee, there can no longer be any such thing as a franchise. Because you can bet that if you have bought a McDonald's franchise, they are going to tell you that you have to clean the restaurant, wear the uniform and probably that you have to be be open for certain minimum hours.

        Maybe we want to ban franchises but that seems like an over-reaction to a new taxi dispatch service.

        1. This post has been deleted by its author

        2. Anonymous Coward
          Happy

          Re: Ebay

          But if you use that "Master/Servant" relationship as the basis for deciding if someone is an employee, there can no longer be any such thing as a franchise. Because you can bet that if you have bought a McDonald's franchise, they are going to tell you that you have to clean the restaurant, wear the uniform and probably that you have to be be open for certain minimum hours.

          The master/servant relationship isn't the full story, another important aspect is that employment is personal. The employee is a named individual who must personally do their employer's bidding. If your contract gives you the right to hire someone else to do the work instead of having to do it yourself then you cannot be an employee - i.e. the franchise holder would have to be required do all the cleaning, cooking and serving personally.

        3. Anonymous Coward
          Anonymous Coward

          Re: Ebay

          "they are going to tell you that you have to clean the restaurant..."

          No, they're going to place that requirement on the franchise as a corporate entity. Who the franchise gets to do that work is up to the franchise, making the franchisee-franchiser relationship definitively not one of employment, even if the franchisee is not a corporate entity (which it invariably is).

    6. Doctor Syntax Silver badge

      "which is the resident monopolist agent between supplier & customer"

      This is where your argument fails. Ebay isn't a monopolist. You can use Amazon market place, you can set up your own website, you can sell door to door, rent a shop or a market stall. You have options. Choosing to sell through Ebay is simply taking a ready made route and grumbling about it.

  9. Anonymous Coward
    Anonymous Coward

    Are they going to bother asking...

    The gig workers themselves and small businesses to find out what they want?

    Or is this all just a discussion between the big boys and big gov?

    I used to hep run a courier firm that only hired drivers with self employed status. It had nothing to do with shirking responsibility it was more about flexibility. To compensate for periods of no work we paid a higher rate. For example July/Aug/Sept is a relatively quiet period in freight and given that freight is low margin and cashflow based you can't afford to be paying salaries for dozens of drivers in this period.

    Driving can be a very seasonal job...whilst I agree that the likes of Uber et al are probably taking the piss if sweeping changes are made it will seriously hurt small businesses and push a lot of firms out of business. Its already hard for British couriers to compete in tje European courier market due to countries like Poland heavily subsidising vehicles, fuel and having a workforce that will work for pennies a mile.

    Towards the end we were subbing out a lot of work to Polish firms because it was so cheap. Just go to Colnbrook near Heathrow and count the number of Polish vans parked up waiting for loads. Theres always at least a couple of dozen plus more parked on the fringes.

    We were pushed out of business in the end due to sky rocketing business rates though which are scandalous. Especially given you dont even get your bins emptied for the money. Our annual rates bill back then was around £80k a year and we still had to pay Biffa to come and empty the bins.

  10. Boris the Cockroach Silver badge
    Holmes

    Its

    Only because the government can see a fall in tax revenue as EVERYONE goes self employed status that they are starting to care about this

    1. Commswonk

      Re: Its

      Only because the government can see a fall in tax revenue as EVERYONE goes self employed status that they are starting to care about this

      And trying to ratchet up fees for granting Probate to plug the gap. The Home Office is trying the same trick with other fee - based transactions, specifically the costs of administering the cost of "Approvals" and changes of Secretary for individual shooting clubs.

    2. JimC

      Re: Its... starting to care about this

      Exactly. And rightly so. State security as Attlee intended it was kinda like a bloody great friendly society. People who aren't in need put money in, people who are in need take money out. The relatively small number of self employed put less in and got less out, but there was a kind of balance, and the numbers weren't big enough to care about. Eighty years on the self employed are vastly greater in number and taking far more out when they get old and sick, so there's less balance and thanks to the abuses the numbers *are* big enough to care about.

      1. Yet Another Anonymous coward Silver badge

        Re: Its... starting to care about this

        Except the self-employed put twice as much in (have to pay both employer and employee social security) and don't get anything out - try claiming dole because you don't have any contracts lined up

        1. Anonymous Coward
          Anonymous Coward

          Re: Its... starting to care about this

          If you're paying employer and employee contributions you're not self-employed. You're an employee. So you're putting in the same amount as everyone else because everyone else is an employee as well.

          Unless they're pseudo-self employed (as is the case with Uber et al) in which case no one is paying the employer contributions and the risk and cost are offloaded to the state.

          Comparisons to freelance IT contractors paying themselves minimum wage to avoid NICs are an exercise left to the reader.

  11. Zog_but_not_the_first
    Facepalm

    Not just the so-called "gig" economy either...

    ...with the majority of benefits recipients in (low paid) jobs, the proliferation of payday loans, juicy Gov. contracts going to single tender organisations like Capita.

    Any yet, people continue to vote for politicians who consistently and progressively abuse them. Is it because:

    They're stupid?

    They're miss/ill informed?

    They don't see a credible alternative?

    They enjoy suffering?

    Probably a bit of each, save the last.

    1. Commswonk

      Re: Not just the so-called "gig" economy either...

      They don't see a credible alternative?

      Probably because there simply isn't one.

    2. Anonymous Coward
      Anonymous Coward

      Re: Not just the so-called "gig" economy either...

      You missed off strong and stable, people tend to vote for whichever party is strong and stable and they want a strong and stable government to lead the country as strong and stable as it can be because after all we want a strong and stable world.

      1. Anonymous Coward
        Anonymous Coward

        Re: Not just the so-called "gig" economy either...

        Can you clear something up, because I am confused? I thought I was meant to make my family hardworking. I now send my son up chimneys, made my daughter take in ironing to do after her homework and before she starts her paper round, and my wife is working one shift as a uber driver and an other as a deliveroo cyclist specialising in taking pizzas to the local mountain rescue hut. And now apparently I have to build strong stables? I don't even own a horse!

      2. tedleaf

        Re: Not just the so-called "gig" economy either...

        No,you want a strong and stable gov that helps keep you in your nice position,how many vote for something that will cost themselves money/job security etc etc.

        Look at the last ten election,Tory plan was to keep middle class inside by cutting benefits wtc for the poorer folk,and oh look,the middle class voted in huge numbers for something that they knew would badly hurt millions of folk but would keep them their nice cushty lifestyles..

      3. Pompous Git Silver badge

        Re: Not just the so-called "gig" economy either...

        "after all we want a strong and stable world"
        And what do we find in the stable? A horse's arse!

    3. Whitter
      Flame

      Re: Not just the so-called "gig" economy either...

      Whenever people are in full time employment but still need government benefits to make ends meet, then there is a strong argument that the employing company is in effect being subsidised by the state.

  12. Lotaresco

    Sick pay

    As the owner of a small business I have to say that the notion that a self-employed person would pay me (something) in order to receive sick pay from me is a clear flag that there is no element of self-employment. If I get sick no one pays me, not even the state. If there is sick pay then the person being paid is an employee, no matter what deductions are made from that individuals pay packet to cover sick pay provision.

    HMRC need to get their act together. It's HMRC that permits these practices to slide past

  13. John H Woods

    There is a way the gig economy can work ...

    ... it's called Universal Income

    If people have a basic safety net of shelter, food, healthcare and education for their kids, we can have full-on uber-capitalism, with the market deciding the rate for all work. Employers then only need to ensure they comply with health and safety, and all other red tape can be ditched.

    Universal income is often dismissed as a socialist utopia --- but to my mind it is an enabler of a much freer employment market, with just a simple safety net for the sake of common humanity. But this net is not "sticky" -- every hour you work makes you better off.

    1. Commswonk

      Re: There is a way the gig economy can work ...

      Universal income is often dismissed as a socialist utopia

      As you have described things that is exactly what it would amount to. The "market" has already been constrained by the intoduction of the Minimum / Living Wage, and those earning that are generally in receipt of in - work benefits to make up a shortfall. And where do those in - work benefits come from? Taxpayers, that's where, and at the moment there simply isn't enough tax going into the Treasury because the Ubers / Amazons / Facebooks / etc of this world are able to organise their affairs to pay little or no tax and pay their "employees" as little as they can get away with.

      There was talk the other day about "barista visas" to allow immigrants to come and work in coffee shops. How many coffee shops do we need FFS? Every cup of coffee you buy costs what you have to hand over to get it PLUS a taxpayer subsidy to augment the living wage. The hospitality industry has a certain reputation for being a low - paid career; the CEO (I think) of a major player in that field was on the Today prog last week talking about opening more beds in the next 12 months, and yet each of those beds effectively costs the taxpayer to fill because of the need for in - work benefits to top up what the chain(s) actually pay in wages.

      Carrying this argument to a logical conclusion leads me to suspect that every tourist coming to this country (a very important source of income by all accounts) effectively does so at the expense of the UK taxpayer who has to augment the poor pay of those who look after them during their visit.

      This is the economics of the madhouse, and appears to be based on the erroneous assumption that if Corporate Britain benefits then so do its inhabitants; I query the validity of that assumption. IMHO the growth of the gig economy serves to highlight the weakness of the assertion.

    2. Doctor Syntax Silver badge

      Re: There is a way the gig economy can work ...

      "Universal income is often dismissed as a socialist utopia"

      Unless you have a plan to finance it it's not even that. Simply saying "universal income" on its own isn't enough. It can only be one element of a more complex financial system. What else do you propose to complete it?

      1. John H Woods

        Re: There is a way the gig economy can work ...

        "Unless you have a plan to finance it it's [universal income] not even that" -- Doctor Syntax

        It's rare that I disagree with you Doctor, but I must. We already (at least in theory) provide a welfare system that (theoretically) prevents the poorest from being homeless, starving, excluded from healthcare and their children being excluded from Education.

        It's a massive bureaucratic mess employing thousands and thousands of people in unproductive jobs and the costs, well, the Universal Credit fiasco has been covered in this esteemed organ ad nauseam. It makes the welfare net "sticky" --- you can't get off welfare easily unless you go straight into some kind of job --- there's no legitimate way of doing a few hours work: people avoid work or do cash-under-the-table. And it means that we have to place huge burdens on small employers (proportionally much higher than big employers) to administrate all the various things such as Employers NI, Workplace pension, notice periods, redundancy, etc.

        Why would a UI system cost more than an Universal Credit system? A person earning 50k pays 13.5k tax (including NI) every year. The bottom 11.5k of that is tax free, the top 5k is at 40% and the rest at 20%. If UI were set to 11.5k, and tax at a flat rate of 50%, that person would receive almost exactly the same amount of net income. A person earning 10k annually, who currently pays only 220 tax a year would see their income rise to 16.5k and they'd be paying 5k tax. A person earning 150k, on the other hand, currently pays 60k and receives 90k net. They'd be paying 75k and receiving 75+11.5 = 86.5k, so they would face a small drop.

        Providing 11.5k annually to 45 million adults would be approaching 500 billion, sure, which is twice our current welfare system. But the overall tax take would go up, the economy would be stimulated, the huge waste in the welfare and taxation systems enormously simplified: for instance, the 50 billion spent on in-work benefits would just be completely unecessary, as would the vast machinery for managing it.

        It's ridiculous to say we can't afford basic income: unless we are allowing people to starve, freeze, die unecessarily due to lack of healthcare and preventing their children from accessing free education, we are ALREADY PAYING it, just in the most ridiculous, complex and wasteful way imaginable.

        1. Pompous Git Silver badge

          Re: There is a way the gig economy can work ...

          "we are ALREADY PAYING it, just in the most ridiculous, complex and wasteful way imaginable"
          Amen! Oh, and a Awomen too...

        2. Doctor Syntax Silver badge

          Re: There is a way the gig economy can work ...

          "And it means that we have to place huge burdens on small employers (proportionally much higher than big employers) to administrate all the various things such as Employers NI, "

          Employer's NI is, of course, only one part of what they administer. Employee's NI and Income Tax are others. But you need these taxes to pay for your UI. You still need to construct an entire workable system which ensures that there's sufficient resources to pay your UI. Simply replacing one mess with another doesn't cut it. I think you're quite rightly looking at UC and saying it's a mess but part of the problem is that it's a messy component of something that's better described as a shambles than a system and simply replacing that component doesn't make it less of a shambles.

  14. tedleaf

    You mean just like most of the firm's that have been handed contracts for jobs that used to be done by public employees but are now done by profit making firms whom the vast majority of their workers are forced to claim top up benefits like working tax credit etc etc.

    You can also add most of the large British retailers like tesco/morissons etc etc who's staff also have to claim benefits..

    It has nothing to do with the "gig economy" it's been happening for decades in huge swathes of the lower paid part of the UK economy,it's called screwing your workers,no matter what lip service they pay to legislation that is rarely enforced..

    It's one of the main reason for our ridiculous open door immigration policy,it drives down wages at the bottom part of market while allowing middle/upper part to steal more for doing less or bigger all..

  15. tedleaf

    I look forward a few years after brexit to reading on el ref all the complaints from the nicely paid I.t world that they ar3 suddenly suffering the same problems as yank I.t workers as UK gobs carry on with open door policy but allow un- limited entrance to foreign I.t workers who are willing/able to work for much less.

    Enjoy being forced to train the Indian etc who will take your nice cushty job right out from under yer bum..then you too can enjoy the priveledge of being what on by those with more clout than you..

    I wonder how many Indians etc BT/Openreach will import once they can ?

  16. Anonymous Coward
    Anonymous Coward

    The UK has a much better chance of doing this than the US

    Since most of the 'gig economy' companies are based in the US, there would be too much pressure preventing real reforms. The CEO of Uber just has to spread around a few of tens of millions, or pocket change for him, and any legislators who get the idea of passing laws that restrict Uber's behavior will forget about that and move on to the next idea.

    Ironically, one of the reasons Trump is finding it nearly impossible to 'repeal and replace Obamacare' like he promised is the rise of the gig economy which was helped by Obamacare making insurance more available/affordable (especially for those who aren't young and healthy) Making changes that would cause 20 million to lose their insurance, or drop the restriction on pre-existing conditions is what is getting angry people (who aren't all just democrats) showing up at republican town halls telling them not to vote for the bill.

    Unfortunately Obamacare was already having serious issues, and Trump has guaranteed its eventually failure by having the IRS drop the health question question on tax forms, making the individual mandate effectively unenforceable. Without healthy people in the system supporting things, it will quickly collapse. It is as if good drivers were allowed to go without insurance, and only people with DWIs and a dozen traffic tickets were buying it - no one would be surprised that the monthly payments for such auto insurance was comparable to a mortgage payment...

  17. Anonymous Coward
    Anonymous Coward

    I guess nobody here uses Uber for the lower prices and better service but instead patronizes the traditional taxi companies. Because otherwise you're just as guilty as profiting from it as Uber, more so in fact as Uber hasn't turned a profit yet.

    This is just another tax grab, governemnts of all stripes can never get enough tax until they have 100% of everything, because you stupid bastards can't be trusted to make decisions about spending on your own, you need a wise, benevolent government to make all those decisions for you. And no, you're NOT part of that wise and benevolent few no matter how much you believe you should be. That's reserved for your political betters.

  18. Tom Melly

    Blame NuLabour

    Tax credits were/are a disaster, and basically helped establish the model - low wages and let the state pick up the slack. Quite clever really - appeals to both their voter base and the employers. Pure poison.

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