Review of gig economy 'to recommend boost for worker rights and tax shake-up'

Gig economy
Gig economy

A major review of the so-called "gig economy" will recommend extra rights for workers but also suggests a shake-up of the tax system for the self-employed, according to a leaked report.

The Government-commissioned report by Matthew Taylor, Tony Blair's former head of policy and chief executive of the Royal Society of Arts, examines the use of zero-hours contracts and the rise in app-based firms such as Uber and Deliveroo.

The report is expected to be published next week but a leaked draft obtained by The Times suggests the Government should introduce a new category of people who are eligible for workers' rights but are not employees.

It recommends that legislation refer to this group as "dependent contractors" and suggests that people in that category should be able to earn the national minimum wage (NMW) if they want.

The report said: "The same basic principles should apply to all forms of employment - there should be a fair balance of rights and responsibilities, everyone should have a baseline of protection and there should be routes to enable progression at work."

It was essential not to lose the flexibility offered by gig economy firms, but the inquiry had "heard reports of an oversupply of labour at certain times, effectively flooding the market and drivng down the hourly rate" to below the minimum wage.

"In re-defining 'dependent contractor' status, Government should adapt the piece rates legislation to ensure those working in the gig economy are still able to enjoy maximum flexibility whilst also being able to earn the NMW if they so wish," the leaked draft said.

Agency workers on zero-hours contracts could also benefit from new rights under the proposals in the review.

Agency staff should have the right to request a direct employment contract with a firm when they have been working there for 12 months and there would be "an obligation on the hirer to consider the request in a reasonable manner".

The report hints that the self-employed could face tax rises in an effort to reflect the realities of modern employment practices.

It said: "Over the medium term, in the interests of innovation, fair competition and sound public finances we need to make the taxation of labour more consistent across employment forms while at the same time improving the rights and entitlements of self-employed people."

An attempt to raise National Insurance contributions for the self-employed in order to bring them closer to the rates paid by people in employment was abandoned a week after being announced in the March Budget in a humiliating U-turn.

Downing Street would not be drawn on the contents of the report ahead of the official publication, expected on Tuesday.

"We don't comment on leaked reports," a Number 10 spokesman said.