The Impact of Labour’s Proposed Legislation on Gig Economy Worker, (That’s drivers to you and me)

Let’s just look at what would happen if (as the polls suggest) there may be a significant shift in political landscape with the Labour Party potentially having a chance to win the next general election. Discussions surrounding employment rights and labour reforms have taken centre stage.

Deputy Leader of the Labour Party, Angela Rayner, recently announced plans to introduce substantial changes aimed at reshaping the landscape of temporary staffing, gig working, and contracting. While the proposed reforms are ambitious and aim to protect workers’ rights, they also raise complex challenges, particularly concerning self-employed drivers and their engagement with UK operators.

Key among Labour’s proposals is the promise of day one employment rights for all workers and a ban on exploitative zero-hours contracts, along with an end to what they term as “bogus self-employment.” While these intentions may be seen as noble, and some may say just rhetoric. They are offering to fix what has been a muti faceted super complicated grey area of legislation that we in the UK have been trying to get to grips with for decades. The challenges of implementing such legislation are significant.

One of the most challenging aspects of the proposed reforms is the eradication of what they call ‘bogus self-employment.’ Determining who is genuinely self-employed versus being misclassified by employers is a notoriously difficult task and incredibly subjective, in reality. The current tests in the UK rely heavily on complex case law, which can be challenging to apply to modern working arrangements, especially those involving self-employed drivers engaged in flexible work forces with constantly changing and evolving work dynamics.

To address this issue, I suspect that legislators might consider adopting a test like the one used in the US or the EU’s Platform Worker’s Directive. However, finding a clear and fair combination of tests has proven to be elusive even at the EU level, indicating that implementing effective legislation may be a lengthy and intricate process.

Additionally, there’s a concern about the administrative burden and potential loopholes that could arise from a precise statutory definition of self-employment/employment. Labour’s proposal to increase “chain liability” risk, where entities at the top of a supply chain bear tax and employment liabilities, adds further complexity to the issue. Let’s face it IR35 implementation in the UK, rather than simplifying the relationship between PSC (personal service companies i.e., one man band Ltd companies), put the onus on the contacting party to decide whether they are caught by IR35, in many cases it pushed people towards umbrella companies, which made the relationship more complex.

Labour’s focus on providing rights such as sick pay from day one raises questions about the practicality of such measures for short-term or infrequent workers. Moreover, the upcoming Right to Predictable Working Hours legislation, scheduled to come into force in September 2024, may already address some of the concerns raised by Labour’s proposal, suggesting potential redundancy or overlap in legislation.

Considering these challenges, one potential solution lies in establishing regulated “engaging’ organizations” akin to guilds. These organisations could act as engagers or agents for self-employed, providing benefits such as pensions, holiday pay, and access to training and financial services from the outset of any engagement.

Matthew Taylor’s review proposed a similar idea to the Conservative government years ago, indicating bipartisan recognition of the need for such arrangements. Embracing this approach could help legitimize the gig economy while ensuring fair treatment and protection for workers.

In conclusion, while Labour’s proposed legislation aims to address longstanding issues of worker exploitation and misclassification, its implementation poses significant challenges. The complexities surrounding the definition of self-employment, the feasibility of day-one rights for all workers, and the need for effective enforcement mechanisms require careful consideration and consultation with stakeholders. Embracing innovative solutions such as regulated organisations could offer a way forward.