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MPs accuse companies of exploiting 'gig economy' loopholes

MPs have accused some of the leading figures of the so-called "gig economy" of exploiting loopholes in the law to take advantage of workers over employment rights.

They also suggested businesses were hiding behind a facade of having self-employed workers, allowing them to palm off huge financial responsibilities to the taxpayer.

Bosses from Amazon, parcel delivery company Hermes, courier firm Deliveroo and taxi firm Uber were forced to defend their organisations in the face of searching questions from the Work and Pensions select committee.

They were summoned by MPs in the wake of the announcement of a Government review into working practices amid a huge increase in those employed in temporary positions, often without guaranteed hours or basic employment rights.

The bosses defended their self-employment models as offering flexibility for workers, saying many valued the freedom to choose when to work and who for over security, and that they paid at least the national living wage.

They also called for greater support from the Government for their self-employed workers through benefits that other employees are entitled to.

But Tory committee member Heidi Allen questioned their commitment to workers, demanding to know how people who worked around 30 hours a week for a company could be regarded as self-employed.

She said: "If any of you are employing people who are approaching 30 hours and you are talking about national living wage, it is not national living wage because those people are not getting sick, maternity, paternity, holiday (pay).

"Never mind waiting for the Government, when are you going to start paying people properly when they are doing on a regular basis something that's approaching full time?"

Dan Warne, UK managing director of Deliveroo, said 85% of its riders used the work as a supplementary income, working for an average of 15 hours a week.

He said: "If they were self-employed we couldn't offer them the same degree of flexibility that we do, even working 30, 40 hours in a week.

"If we were to make them employees we would have to restrict that flexibility which we know that they value.

"If we weren't to make them employees then we are restricted from providing some of the benefits that we would as a business would like to provide."

But committee chairman Frank Field told him: "There doesn't seem to be any flexibility at all, except on your side.

"You are not paying National Insurance, you are not covering other costs which taxpayers will have to actually pick up.

"It's a marvellous model if you can get away with it."

Deliveroo also backtracked on a controversial clause in its rider contracts which forbids couriers taking the company to court or tribunal over the issue of whether they are self-employed.

Mr Field told Mr Warne: "You have got this wonderful model that people want to opt into, but you are frightened of them saying, 'My god, this isn't self-employment, this is employment', and you stipulate that they should not be free to dispute your ruling."

Mr Warne told the committee that Deliveroo would not challenge workers if they contested their employment status and promised the company would drop the clause from its contracts.

Defending their business models, Mr Warne said his company's 15,000 riders helped drive an economy that was "not previously legitimised", and that removing flexibility would "compromise" that.

Carole Woodhead, chief executive of Hermes, said an assessment by tax authorities in 2011 had concluded that its workers were genuinely self-employed.

But she accepted that HMRC has opened another investigation into the company.

And when she explained that couriers who cannot fulfil a delivery are obliged to pay for a substitute to do their work, Mr Field called it a "very strange self-employment", while Tory MP James Cartlidge said the company was "pushing the boundary pretty thin" by asking workers to commit to the company but not offering them benefits such as sick pay.

Uber UK's head of public policy, Andrew Byrne, said its workers receive £15 an hour before costs and that 94% of them highlighted the freedom to choose their working hours as what they most like about the company.

Pressed by Mr Cartlidge about whether his company would start to foot some of the "huge benefit bill" created by the "pseudo-employment" economy, Mr Byrne said: "We totally recognise that we can do a lot more for people."

MPs urged the companies to examine the possibility of a two-tier system to provide a "safety net" for workers who are essentially full-time employees while still catering for those who work on a more freelance basis.

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