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Minimum entry: Setting a legal wage floor for the gig economy

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Conor D'Arcy's event slides.

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Minimum entry: Setting a legal wage floor for the gig economy

  1. 1. The minimum required? Increasing protection for the self-employed Adele Aspden, Eversheds Sutherland Hugo Martin, Hermes Jason Moyer-Lee, Independent Workers Union of Great Britain AdairTurner, Institute for New EconomicThinking Conor D’Arcy, Resolution Foundation Torsten Bell, Resolution Foundation 1 @resfoundation #GigEconomy Wifi: 2QAG_guest p: W3lc0m3!!
  2. 2. The minimum required? Increasing protection for the self-employed Conor D’Arcy July 2017 @conortdarcy // @resfoundation 2
  3. 3. The rapid growth of self-employment has been one of the labour market stories of recent years 3
  4. 4. But concerns have grown rapidly too 4
  5. 5. Much of the debate around the gig economy has focused on employment status and bogus self-employment 5               
  6. 6. Lack of clarity a reason why disputes on employment status are playing out in the courts • Need for greater clarity and awareness of rights • Some argue for a widening of the employee definition to include workers and some of the self-employed • Whether or not definitions change, improved enforcement of existing legislation a vital first step 6
  7. 7. But going further and extending other rights to the self-employed needed too • Some changes would potentially apply to most self- employed: o Extending Statutory Maternity & Paternity Pay o Extending contributory Jobseekers’ Allowance to those who have paid Class 4 NICs at a profit level of £25k • While other changes – like offering pay protection – would need to be more targeted on specific groups 7
  8. 8. Equalising the tax treatment of self-employed and employed labour would cut down on bogus self-employment • Reducing the incentive for firms to wrongly claim staff are self-employed is key o Eliminating Class 2 NICs and bringing Class 4 up to the 12% employee rate o Extending employer NICs to price-setting firms o Scaling back the tax advantages of self-incorporation by reducing Entrepreneur's Relief & the Annual Exempt Amount • Together, would help low-earning self-employed most 8
  9. 9. Self-employed earn less on average and are more likely to be low paid 9
  10. 10. For those who are genuinely self-employed but take work from firms that set the prices, specific improvements possible • Those who meet other hallmarks of self-employment but can’t control how much they charge • Likely to include some of those in gig economy – taxi drivers and couriers – as well as those in more traditional sectors e.g. hairdressers renting chairs • Pinning down how many are affected is challenging but many of 170k taxi drivers and 40k couriers likely to be included, as well as some of 150k hairdressers and 80k cleaners 10
  11. 11. Approach based on current ‘piece work’ rates and test in minimum wage law • Firm carries out test to ensure that someone working at close to average speed could earn at least the minimum wage • HMRC oversight as with employees, with expanded funding • Options on how this is implemented: o Individual right, though creates new category of self- employed and need to keep records o Duty on firm, though a complaint would require self- employed individuals to challenge 11
  12. 12. Minimum wage not a silver bullet but alongside levelling tax playing field, it would represent important step forward • Lots of theories for rise of self-employment: tax, tech, flexibility (one way or two way), dodging responsibilities • Some more likely than others • Equalising benefits and tax treatment would mean drivers reflect genuine shifts rather than exploiting gaps • Alongside a minimum wage extension, would mean a genuine bolstering of rights for the self-employed 12
  13. 13. The minimum required? Increasing protection for the self-employed Adele Aspden, Eversheds Sutherland Hugo Martin, Hermes Jason Moyer-Lee, Independent Workers Union of Great Britain AdairTurner, Institute for New EconomicThinking Conor D’Arcy, Resolution Foundation Torsten Bell, Resolution Foundation 13 @resfoundation #GigEconomy Wifi: 2QAG_guest p: W3lc0m3!!

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