The gig economy has been under massive scrutiny in the media for years and, more recently, self-employment and atypical working have climbed the political agenda too. 

As CEO of a trade body whose members effectively employ atypical workers, I am pleased to see this shift in focus by Government, Parliament and think tanks.

But what are they trying to solve? And are they going about it the right way? 

These questions kickstarted a panel discussion at the IPA recently chaired by IPA Director Nita Clarke. I had the pleasure of being asked to join Nita alongside John Park of Community, Kate Shoesmith of REC and Michael Mealing of the FSB.

With a melting pot of views from a variety of backgrounds, we were expected to have a lively, engaging discussion. Needless to say, we lived up to the billing but it was encouraging to see there was more common ground than disagreement on some of the most important issues. Here are the top three and why they matter: 

 

1. Clarity

One thing everyone in the room seemed to agree on was the need for further clarity – particularly on employment status.  

There are contradictions in the existing rules. For example, there's the fact that there are currently two categories for tax status but three for employment status. This was always doomed to fail. PRISM engaged the Social Market Foundation to undertake a review into self-employment and contracting. One of the complexities identified in their initial research is that some people have more than one job, and can be classed as both employed and self-employed – the tax system simply doesn’t work for these people.  

We have also seen an increase in cases where employment status in the gig economy has been disputed in court. In many cases rights have been denied to workers who have been misclassified. With clarity of status will come clarity over workers' rights.  

 

2. Direction

PRISM, the trade association I represent, has been calling for a strategic review of the sector. This is because we believe the current problems with tax and employment law are a direct consequence of the silo mentality operating within Government. The issue has seen repeated reviews conducted in isolation. An overarching review that looks at all areas, including tax, benefits and rights stands the best chance of succeeding in the long run. A more holistic approach would ensure a balance between seemingly competing interests – the Treasury’s aim to increase tax take and lower the tax gap, and the desire to protect and support the rights of both the self-employed and employees.  

Our organisation would also like to see the Government introduce a roadmap, similar to that for corporation tax, so we can all get off the merry-go-round of legislative changes that have a distorting effect on the market. From this we would inherit more certainty and a clear direction of travel for employers and workers alike. 

 

3. Transparency 

Transparency is desperately needed throughout the supply chain that governs how a worker is engaged. For example, PRISM believes recruitment agencies and umbrella companies have a part to play in increasing transparency and awareness around rates for workers.  

 

The responsibility to increase transparency also lies with HMRC and they should make this one of their leading aims. Some companies in employment supply chains still show blatant disregard for the rules but more effective enforcement and publicity around it would go a long way in helping to pull all firms into line. This would go some way to levelling the playing field over night because it is the pursuit of profit that creates a lot of market distortions to begin with. The perceived compliance that encourages workers to do business through these firms - whether they are an umbrella company or employment intermediary - would no longer be an issue. Workers would be able to feel confident that if a firm was marketing itself publicly as offering a particular service that was not within the rules, it would soon be removed from the marketplace by HMRC.

Put simply, it doesn’t matter how thick the rule book is, no one will read it or obey it if it’s not enforced. The Government’s decision to appoint a Director of Labour Market Enforcement is a positive step in the right direction but more work needs to be done in this area.  

Atypical working is increasing.  If the Government doesn't get ahead of the game and stay one step ahead, then we’re stuck with the status quo and that's probably the worst outcome for everybody.