• Gig Economy badge

Gig Economy Companies Have Been Accused Of "Free Riding" On The Welfare State

Companies are passing the buck to taxpayers when it comes to benefits they should be paying the people who work for them, a report has said.

Gig economy companies are taking advantage of the UK benefits system to support the people that work for them, a report by the work and pensions committee has said.

The committee, chaired by Labour MP Frank Field, called on the government to "close loopholes exploited by gig economy companies", and urged it to make companies like Uber, Amazon Flex, Deliveroo and Hermes categorise those who work for them as “workers” by default, rather than as self-employed.

The inquiry, which saw representatives from those companies hauled before MPs, explored the impact of the gig-economy upon the people that work in it, which sees companies signing up those who work for them as self-employed contractors, rather than as “workers”.

Those who are self-employed, however, are not entitled to rights that they would be as workers, including the minimum wage, sick pay, holiday pay, or a company pension.

The report found the benefits system was acting as a safety net, with ordinary taxpayers being made to “pick up the tab” for benefits that gig-economy companies should otherwise be providing.

“Increasingly, some companies are using self-employed workforces as cheap labour," the report said, "[while] excusing themselves from both responsibilities towards their workers and from substantial National Insurance liabilities, pension auto-enrolment responsibilities and the Apprenticeship Levy."

Those gig-economy companies, the committee said, were “propagating a myth of self-employment.”

Field, the committee's chair, said the inquiry had “convinced” him of the need to offer “worker” status to the drivers who work with companies such as Uber as the default option”, which would be a “much fairer reflection of the work they undertake” and “protect them from some of the appalling practices that have been reported to the committee in this inquiry.”

“It is clearly profit and profit only that is the motive for designating workers as self-employed,” he said. “The companies get all the benefits, while workers take on all the risks and the state will be expected to pick up the tab.

"It is up to government to close the loopholes that are currently being exploited by these companies, as part of a necessary and wide ranging reform to the regulation of corporate behaviour.”

BuzzFeed News asked the companies that gave evidence to the inquiry to respond to the report.

A spokesperson for Uber said: “Almost all taxi and private hire drivers in the UK have been self-employed for decades and with Uber they have more control over what they do." They added that Uber drivers were "free to choose if, when and where they drive with no shifts, minimum hours or uniforms."

“The vast majority of drivers who use Uber tell us they want to remain their own boss as that’s the main reason why they signed up to us in the first place."

A spokesperson for Amazon referred BuzzFeed News to an earlier statement, which stated that "the majority of people participating in Amazon Flex already have full or part time jobs and use the programme to top up their income." They added that it offered people the opportunity to work on "their schedule".

Hermes and Deliveroo had not responded at the time of publication.