Rigid minimum wage rules could end gig economy work, warns Matthew Taylor

11 Oct 2017 By Hayley Kirton

But MPs say his proposals would create a ‘slippery slope’ and be difficult to police

Requiring gig economy employers to stick to strict minimum wage rules could put an end to ‘valued’ modern-day flexible-working options, the author of the Taylor review has cautioned.

Speaking at a joint hearing of the Business, Energy and Industrial Strategy (BEIS) and the Work and Pensions select committees this morning, Matthew Taylor argued that companies such as Uber were concerned that, if they did have to classify their drivers as workers and pay the minimum wage, it “could lead to a situation where thousands of people log on in the middle of the night, when there isn’t much work, but are guaranteed minimum wage”.

Taylor warned that a strict application of the minimum wage rules would mean “we would probably have to end on-demand work and the people who work on those platforms will be disappointed if we end on-demand work because they value it”.

The Taylor review, a government-backed report into modern working practices, was published three months ago. It included a proposal that companies would not have to pay the minimum wage if they could prove that their average worker received 1.2 times the minimum wage, that people genuinely could work when they wanted and that people were provided with details of how much they could earn if they logged into work at any particular moment.

Taylor said today that the modern gig economy gave people unique opportunities to work as and when they wanted to – something that very few traditional employment models could offer. “I can’t just rock up at a strawberry farm in February and say: ‘I want to pick strawberries,’” he said. “There are no strawberries.”

However, Rachel Reeves, chair of the BEIS committee, argued that his suggestion would create a “slippery slope”. She said it would be difficult to validate that companies were sticking to Taylor’s rules, and regulators would struggle to handle the complexity of the data involved.

Taylor is appearing before MPs a day after the BEIS committee met with representatives from Deliveroo, Hermes and Uber, who claimed that their current business models benefitted riders and drivers by offering flexibility.

Hugo Martin, director of legal affairs at Hermes, said he thought many of the organisation’s couriers would not want to give up the flexibility the current business model offers, adding: “The self-employment model creates a flexible framework.”

And both Dan Warne, managing director for the UK and Ireland at Deliveroo, and Andrew Byrne, head of public policy at Uber, noted that, if they were required to treat all their independent contractors as workers, this could hinder the flexibility they are currently able to offer and may result in the companies needing to exert more control over their riders and drivers, such as introducing shift patterns.

All three firms are facing tribunal claims over employment status. A tribunal claim against Hermes is due to be heard either later this year or early next year, while Byrne revealed that a judgment from the Employment Appeal Tribunal about Uber drivers was expected around Christmas.

The Taylor review was published before the Supreme Court ruled that tribunal fees were unlawful and should be immediately scrapped. Taylor said today he was “delighted” with the outcome of the case and added that, had he predicted the ruling, perhaps he would have pushed more strongly in his report for the fees to be reformed.

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