Halting race to the bottom protects workers and bosses - Frank Field and Rachel Reeves
The government asked Matthew Taylor to lead its review of modern employment practices. Both our committees are clear that the government must implement its best recommendations. We call for a new framework, including new legislation, to address the urgent need to create a level playing field for businesses and to shield workers from exploitation.
Britain’s labour market often leads the world with its entrepreneurial spirit and economic dynamism, from the boom in self-employment to the growth of flexible forms of work using digital platforms. But too many workers are locked out of opportunities and prosperity. For them, the labour market is scarred by insecurity and injustice. Many can never be sure how much work they will get and whether they will earn enough to pay the bills.
When some businesses get an advantage by exploiting sources of cheap labour and avoiding tax, those responsible businesses that play by the rules are at a competitive disadvantage. Disincentives against good business behaviour benefit no one: not workers, not taxpayers, and certainly not ethical, law-abiding business owners, who risk being undercut by less scrupulous competitors. Good businesses have nothing to fear from our recommendations.
Divergent judgments on worker status involving Uber and Deliveroo show an urgent need for legal clarity. Understanding the difference between employees, workers and self-employed status requires the average worker or business owner to have an extensive knowledge of case law. Workers have little chance of knowing whether they are receiving the rights to which they are entitled. Businesses, too, leave themselves open to legal challenge unless they fully understand the rules.
Implementing the proposal of “worker status by default” would end the system that encourages businesses to wait and see if workers challenge practices that are incompatible with self-employment. It would protect workers and halt the race to the bottom that creates a competitive advantage from being willing to deny basic rights.
Businesses in the “gig economy” regularly contend that their drivers and riders benefit from the flexibility of their employment status. However, that flexibility often seems one-way, with the business able to exert control and the individual forgoing the benefits and rights of a worker. If we were to put a premium on flexibility, that could be a real game-changer to help the lowest paid. A premium on the national minimum wage/national living wage for non-guaranteed hours worked could prompt companies that benefit from flexible workforces, often by using zero-hour contracts, to transfer some of those benefits back to workers: either by guaranteeing more hours, or compensating workers for insecurity.
We also a need a tougher approach to enforcing the law. At present, businesses can expect an inspection of their labour practices just once every 500 years — creating brilliant odds for those playing fast and loose with employment law. Even if caught, they receive only desultory fines.
Our proposals are backed by two cross-party committees which highlights significant support in the Commons for this part of the prime minister’s agenda. It is time for the government to grant the parliamentary time to take these changes forward.
Frank Field is chairman of the work and pensions committee. Rachel Reeves is chairwoman of the business, energy and industrial strategy committee