British companies that breach workers’ rights will face higher fines, and employee rights to sick pay and holiday pay will be more strictly enforced, the government will announce on Wednesday in response to an influential report on modern workplaces.
As well as stricter enforcement of existing rights, the government will launch a set of consultations on fuller reforms to employment law proposed in a report by Matthew Taylor, a former adviser to Tony Blair, who examined the regulation of companies in the so-called gig economy, such as Uber and Deliveroo.
Gig economy platforms connect workers with customers without taking any responsibility for them as employees, leaving them in a legal no man’s land.
Mr Taylor proposed a new category of “dependent contractor” to replace the current loosely-defined category of “worker”, that exists alongside “employee” and “self-employed”. Whether workers fit into this category would depend on the degree of control that their employer imposes.
The government will announce a consultation on this proposal, as well as examining a recommendation to close a loophole that allows agency workers to be paid less than employees doing the same job.
“On employment rights themselves, the government has announced a wide range of consultations,” said Torsten Bell, director of the Resolution Foundation.
“For some of these, such as the complex issue of employment status, that is sensible. But the risk for others is that the government gives us a topic of conversation when what Britain really needs is an agenda for action,” he said.
The government has asked the Low Pay Commission, which advises the authorities on minimum wage levels, to examine Mr Taylor’s proposal for a higher minimum wage for workers on zero-hours contracts.
The rise of the gig economy, as well as increased use of zero-hours contracts and the growing number of people declaring themselves self-employed, has led to a debate between those who support what they say is Britain’s flexible labour market and others concerned about the growing number of workers with minimal rights.
As well as the consultations, the government is set to announce measures to improve enforcement of workers’ existing rights. The right to holiday and sick pay will be enforced for the first time by HM Revenue & Customs.
“We recognise the world of work is changing and we have to make sure we have the right structures in place to reflect those changes, enhancing the UK’s position as one of the best places in the world to do business,” said Theresa May, the prime minister, ahead of the government announcement.
“We are proud to have record levels of employment in this country but we must also ensure that workers’ rights are always upheld,” she added.
Under the new rules, fines for employers who show “malice, spite or gross oversight” will be quadrupled to £20,000 and the government will consider higher penalties for repeat offenders who have already lost similar cases.
Tim Roache, general secretary of GMB, the UK’s third-largest trade union, criticised the government’s response to the Taylor Review, describing it as “trying to put out a forest fire with a water pistol”.
“Big change is needed, change that is backed up by law and proper penalties for breaking those laws,” he said.
Mr Taylor, who is head of the Royal Society for the Arts, said: “There is much more to be done to make good work for all a realistic goal, but the government response to my review is substantive and comprehensive. It will make a difference to the lives of the most vulnerable workers and that is what matters.”