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17 December 2018updated 26 Jul 2021 3:33pm

Life for gig economy workers will only improve if the government’s rules can be enforced

The government has published its plan to improve the quality of jobs, in response to the Taylor Review. 

By Lindsay Judge

It’s here at last. Almost a year and a half after the Taylor Review was published and four consultations on, the government has finally released its plan of action to improve the quality of jobs in the UK. So is this an early Christmas present for the millions of people who work through an agency, are on a zero-hour contract or find their jobs via a platform? Or simply a turkey for all of those in atypical work?

For agency workers there’s a certainly a big win in the plans: a commitment from the government to repeal the “Swedish Derogation”, a piece of legislation that allows firms to pay agency workers who have been in post for more than three months less than directly-employed staff in the same job. From a living standards perspective, that’s definitely good news, and goes some way to reducing the £400 annual pay penalty that agency workers experience simply because of the way they work. Moreover, the government has said it will take steps to provide agency workers with a clear statement of rights. Given we have flagged before that knowledge of holiday pay entitlements and auto-enrolment is particularly parlous, action on these fronts would be especially welcome. 

In contrast, the lack of action on zero-hour contracts has come in for some criticism down the day. Although most knew a ban was never really on the cards (Taylor was explicitly against such a move, for example), the announcement that workers will only be given a right to request a contract with stable hours after 26 weeks of continuous service still seems small comfort. But there another source of hope for those on short and variable hours. In a side letter to the government’s plan, the Low Pay Commission recommends the government give such workers a right to predictable hours as well as to consider introducing minimum notice periods for shifts and fines for late cancelation. While this proposal will be subject to yet another consultation, if taken forward this would be a gift indeed.

Finally, there’s also something in the government’s plan for those concerned about the rise of the gig economy. Uber drivers, Deliveroo cyclists and the like have fought numerous court battles in recent years to determine whether they are workers or self-employed – a critical distinction on which a number of key entitlements such as holiday pay and the right to the National Minimum Wage hinge. The government has said it will cut through this issue and legislate to clarify the boundary between the two categories, and seek to align the rules more clearly with those governing tax status (an important issue given the tax advantages of falsely identifying as self-employed).

So far, so good, but the government has also rightly focused on the need to enforce the rules properly. While we have seen muscular action from HM Revenue and Customs on National Minimum Wage non-compliance in recent years, and extended powers for the Gangmasters and Labour Abuse Authority to tackle modern slavery, it is still the case that we rely largely on workers to enforce their own workplace rights in the UK today. This is a serious problem given those most likely to have cause for complaint are also least able to assert themselves. In the last 12 months, for example, only 0.2 per cent of Employment Tribunal (ET) claims were made by agency workers, despite the fact that they comprise close to 3 per cent of the workforce.

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Of all the changes announced today, then, the one that could have the biggest and most immediate impact on atypical workers is not a rules change, but the decision to bring together Britain’s labour market enforcement agencies under one roof. Critical to the success of that venture will be proper resourcing so the new body can proactively in seeking out firms that do not comply with the rules. Alas, the government does not start from a position of strength in this regard: in 2017/18, for example, the Employment Agencies Standards Inspectorate which overseas compliance of nearly 40,000 agencies had a core budget of just half a million pounds, enabling just nine inspectors to protect the rights of close to a million agency workers.

Whatever its level of resource, however, the new labour market enforcement agency should aim to be as strategic as possible in its activities. Here’s one idea how. Recent research has suggested that workers in areas with a weak labour markets are most vulnerable to non-compliant behaviour: with few other options locally, they cannot simply vote with their feet when on the receiving end of poor or unlawful practice. Given this, a place-based enforcement strategy that targets such hotspots would maximise impact in what could remain a severely resource-constrained world.

All in all, then, the government’s strategy to transform the quality of work in the UK has many of the right ingredients. But some key questions remain. When will the government make the various legislative changes promised? How will it clarify the blurry boundary between worker and self-employed status and will that certainty last or will the courts remain heavily involved? And will the government properly fund the new enforcement body to do its job well?

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As ever, the proof of the pudding will be in the eating – not simply in the words of a published plan. 

Lindsay Judge is senior policy analyst at the Resolution Foundation.