Thinktanks urge Burnham to prosecute gig economy firms over bogus self-employment
Prime Minister Andy Burnham faces pressure to crack down on employment status loopholes affecting four million workers, as thinktanks warn current laws fail to protect vulnerable staff from denial of statutory rights.
The Fabian Society and the Joseph Rowntree Foundation have issued a joint report urging Prime Minister Andy Burnham to initiate civil proceedings against gig economy companies engaged in widespread bogus self-employment practices. The thinktank and charity argue that these practices are systematically denying approximately four million workers key statutory rights, including sick pay, parental leave, redundancy pay, and protection against unfair dismissal.
The report calls on the Fair Work Agency, established in April as a watchdog for workers’ rights, to utilise its civil proceedings powers to prosecute firms suspected of exploiting employment law loopholes. It advocates for a fundamental shift in the burden of proof, moving it from the worker to the employer. This change is intended to prevent individuals from engaging in lengthy legal battles to establish their entitlement to basic rights such as the minimum wage and holiday pay.
Britain’s employment framework currently utilises three distinct classifications: employee, self-employed, and an intermediate “worker” or limb (b) status. According to the report, around four million individuals, including hairdressers, personal trainers, and delivery drivers, fall into the worker gap. Experts suggest many gig economy platforms hire staff in this capacity to avoid granting the fuller protections afforded to employees.
Labour previously pledged to create a single worker status for all but the genuinely self-employed but scaled back this commitment prior to the 2024 general election to mitigate business concerns. The policy was not included in the initial Employment Rights Act shake-up, which bans exploitative zero-hours contracts and introduces day-one rights to statutory sick pay. However, the government has committed to a consultation on moving towards a single status, which the report’s authors argue is essential to ensure gig workers benefit from upgraded protections.
Official government analysis indicates that the planned Employment Rights Act changes would support economic growth but could impose costs on businesses ranging from £350m to £2.9bn. Despite this, Prime Minister Burnham has stated his determination to proceed with the reforms, describing them as the biggest shake-up of employment rights in a generation. A government spokesperson confirmed that the Fair Work Agency is already assisting workers in securing entitled rights and stated that ministers will consider how the Agency can utilise its civil proceedings powers alongside the ongoing consultation.
Luke Raikes, deputy general secretary of the Fabian Society, emphasised that the government must ensure those who disregard employment law do not undercut compliant employers. He argued that if a role resembles employment, employers should treat individuals as employees by default and face enforcement action for non-compliance, rather than forcing insecure workers to litigate against corporate legal teams.
