Influential Labour MP Frank Field has said the “clock is ticking” against companies who exploit workers trapped in the gig economy.
On Thursday ministers ordered a crackdown on companies using large numbers of self-employed or agency workers following an investigation by the Guardian into low pay at the delivery company Hermes.
Field warned that other firms could now face scrutiny, revealing his office had been contacted by couriers working for other delivery companies airing similar grievances to those raised by Hermes workers.
“This is the beginning of what will be a long process of investigating this sort of exploitation,” said Field, adding that he was delighted with the speed with which Theresa May’s government had tackled the issue. “Compared with the last three governments this is rocket speed. We have had a period where employers have been testing the law and no one has been pushing back. This is the beginning of the pushback.”
From parcel carriers delivering packages to online shoppers, to app-driven services such as Uber and Deliveroo, the gig economy, which has transformed delivery services, relies on large networks of self-employed contractors. Their status means they are not entitled to earn the “national living wage” or receive benefits such as sickness and holiday pay.
The growing pressure comes as drivers for the taxi-app company Uber await an employment tribunal verdict on their claim that they should be classed as workers rather than as self-employed.
Since taking over as prime minister, May has talked about the need to “reform capitalism” and promised to improve the pay, security and employment rights of ordinary working people. She has also hired Matthew Taylor, the former head of Tony Blair’s policy unit, to head a review of workers’ rights and practices, which will try to address concerns that millions are stuck in insecure and stressful work.
Field wrote to May recently, asking her to examine a dossier of claims of false self-employment at Hermes. Scores of Hermes couriers’ testimonies revealed how their self-employment meant they received no paid holidays or sick pay – and in some cases were paid below the national living wage.
Field heard back this week from the financial secretary to the Treasury, Jane Ellison, who revealed that HM Revenue and Customs was establishing a specialist unit to investigate firms shirking employment obligations. In her letter she said the government was “committed to taking strong action where companies, to reduce their costs, force their staff down routes which deny them the employment rights and benefits they are entitled to”.
Field said the action showed May’s sentiment about “protecting the soft flesh of Britain’s underbelly” was beginning to take shape.
“The gig economy has made it too easy for companies to unthinkingly exploit large tracts of that soft underbelly,” said Field. “They have been able to offer any terms in gaining flexibility. Clearly that flexibility should have to be bought at a higher price. I think these practices exist because companies could get away with it and now we are testing the law and HMRC rules. If they are found wanting I would expect HMRC to change them.”
In a separate response, Edward Troup, the executive chairman of HMRC, said the Hermes dossier supplied by Field had been referred to the “appropriate compliance teams” for consideration. Troup said confidentiality prevented him from commenting on the tax affairs of individual companies but he fired a warning shot to unscrupulous employers: “Individuals cannot be opted out of employment rights and protections simply by calling them ‘self-employed’. We are committed to tackling false self-employment.
“If we find that companies have misclassified individuals as self-employed, we will take all necessary steps to make sure that they pay the appropriate tax, NICs, interest and penalties.”
In a recent case, agency workers at Sports Direct’s warehouse in Derbyshire were awarded £1m in back pay after it emerged that they had been paid below the minimum wage.
Field said he would be pressing HMRC for an update before Christmas – the busiest time of the year for courier firms. “If we haven’t got a timetable I will be putting pressure on them for one,” he said. “I would like to see them report back before Christmas because if you are being sweated, everyday is a horror.”
