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December 19, 2018

UK gig economy reform improves worker rights while protecting companies

By MarketLine

Reform of UK gig economy employment regulations mean business costs for leading players will remain under control.

The Good Work Plan, the government’s response to the Taylor Review into working practices in the UK, pays particular attention to reforming the growing gig economy. Companies including Uber and Deliveroo have made extensive use of self-employed workers who enjoy less employment rights.

Under new plans, UK gig economy workers will have the ability to request a stable contract after six months, fines for employers who break the law will increase and workers’ rights will be explained in full.

Uber has stated it welcomes the clarity new reforms will bring; labor unions have pointed to what they see as missed opportunities to bring about substantial change.

While reforms will bring about small improvements for gig workers, such as removing the ability of employers to pay workers on zero-hours contracts less than full time staff members, companies using the gig economy will be relieved much stricter regulation was not included due to the potential implications regarding employment costs.

Companies dependent on the UK gig economy could have faced significantly higher business costs

Uber and other gig-economy companies could have faced higher business costs had campaigners secured improved workers’ rights such as the ability to join a trade union and request changes to working patterns.

Out of the 53 recommendations made by the Taylor Review, the government plans to implement 51 of them. Unions and some political groups had campaigned for an outright ban on zero-hours contracts. Had such a plan been recommended and then implemented, business costs for Uber and other such companies would have soared, placing enormous pressure on the business model.

One of the rejected recommendations was ‘dependent contractors’ would earn national minimum wage whilst also being able to take advantage of the flexibility of the gig economy. The term ‘dependent contractor’ refers to a self-employed worker who cannot work for a rival platform for varying reasons, and so becomes dependent on one particular company for their livelihood.

In not allowing workers to work for multiple players, companies will be shielded from uncertainty regarding the availability of their workforce, which in turn will help to keeps costs under control.

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