New laws to close loopholes allowing gig economy firms to cut wage bills by defining staff as self-employed should be closed a cross-party group of MPs have suggested.

Two House of Commons committees published a draft law aimed at tackling the “exploitation” of workers to give firms a competitive advantage.

Companies like Uber and Deliveroo, as well as some shops and other businesses have been accused of avoiding costs of tax, national insurance, pensions, holiday and sick pay by hiring staff on a self-employed status. The businesses argue it gives their staff greater flexibility.


Online cab booking company Uber is currently challenging an employment tribunal ruling that it is wrong to classify its drivers as self-employed. Meanwhile courier firm Deliveroo has recently enjoyed a success on its employment policy.

The MPs from the Work and Pensions and Business committees have also called for a loophole allowing agency staff to be paid less than permanent workers for doing the same job to be closed.

Labour MP Frank Field, chairman of the Work and Pensions Committee, said: “The two committees are today presenting the Prime Minister with an opportunity to fulfil the promise she made on the steps of Downing Street on her first day in office, with a draft Bill that would end the mass exploitation of ordinary, hard-working people in the gig economy.

Frank Field MP

“The Bill would put good business on a level playing field, not being undercut by bad business.

“It is time to close the loopholes that allow irresponsible companies to underpay workers, avoid taxes and free ride on our welfare system.”

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Labour MP Rachel Reeves, who chairs the Business Committee, said: “Uber, Deliveroo and others like to bang the drum for the benefits of flexibility for their workforce, but currently all the burden of this flexibility is picked up by taxpayers and workers.

“This must change. We say that companies should pay higher wages when they are asking people to work extra hours or on zero-hours contracts.

“Recent cases demonstrate a need for greater clarity in the law to protect workers. Responsible businesses deserve a level playing field to compete, not a system which rewards unscrupulous businesses.

“We need new laws but also much tougher enforcement, to weed out those businesses seeking to exploit complex labour laws, and workers, for their competitive advantage.”

Deliveroo cyclist

Other measures suggested include a presumption of “worker by default” so staff qualify for employment benefits and for more legal clarity around employment status.

Frances O’Grady, general secretary of the TUC, said: “Employment status is complex, and can deprive people of their rights at work. So the committees are right to call for reform and wide consultation. The time has come for a Royal Commission, including trade unions and employers.”

The GMB union welcomed the Bill as a step in the right direction but called for investment in tax inspectors to investigate companies who may be flouting employment laws.

What the Government says

A Business Department spokesman said: "We have record numbers of people in work thanks to our flexible labour market, benefiting both workers and business.

"But we recognise that the labour market is not working for everyone which is why we commissioned Matthew Taylor to review modern working practices to ensure our employment rules and rights keep up to date.

"We are considering his report carefully and will respond in due course."