Reforms to the gig economy expected to improve rights for up to 1.1 million people have been delayed until next year, in the latest sign that Brexit negotiations are hampering domestic policy.
Ministers had intended to announce before the end of this month whether they would introduce fresh legislation on modern working practices. But that plan has been shelved amid growing concern that reforms to boost workers’ rights could face parliamentary opposition from the rightwing of the Conservative party.
Downing Street’s adviser on modern work, Matthew Taylor, recommended reforms to employment law, which defines whether someone is a worker and therefore eligible for sick pay and the national minimum wage, or is genuinely self-employed.
It was expected to mean enhanced terms for large numbers of gig workers including tens of thousands of minicab drivers and couriers working for companies such as Uber, Deliveroo and Hermes, which use technology to enable gig working and have treated people as self-employed and therefore not entitled to the national minimum wage or sick pay.
It could also put an end to the rash of court cases being fought by gig economy contractors, many of whom have successfully claimed they are in fact treated as employed workers only without the benefits.
The minicab app company Uber was told on Monday that it would not be allowed to immediately appeal to the supreme court following last year’s test-case ruling that two of its drivers should have been classed as workers rather than self-employed. Instead it will have to make its case at the court of appeal, which means the legal dispute could extend into 2019. Hermes, the courier company, Deliveroo, the take-away delivery company, and Pimlico Plumbers are among the companies that have faced legal challenges over employment status.
During this year’s general election campaign, Theresa May promised the “greatest extension of rights and protections for employees by any Conservative government in history”. She appointed Taylor in October 2016, four months after she became prime minister, and told the nation she would “be driven not by the interests of the privileged few” but people such as those “who have a job but you don’t always have job security”.
It is now five months since Taylor published his review in July and Margot James, a business minister, told parliament: “I am determined that we consider the report very carefully and we will respond fully by the end of the year.”
However, parts of the reform have now been taken over by the chancellor, Philip Hammond, because they affect national insurance contributions, James revealed on Tuesday. She told parliament the government’s view was “there is too much bogus self-employment”. But the Treasury is thought to harbour concerns that any action that increases the cost of employment could reduce the total UK employment rate. Self-employment has accounted for 45% of all UK employment growth since 2008, according to the Resolution Foundation thinktank.
“Matthew Taylor’s review threw up some complex ideas and was wide-ranging,” said a spokesperson for the Department for Business, Energy and Industrial Strategy. “It is quite right the government gives due attention to the recommendations.”
One of the major gig economy companies told the Guardian that shifting self-employed contractors to worker status would increase the unit labour cost by 20%.
Taylor confirmed on Tuesday that the response is now expected early next year. He said: “I would rather it was later and stronger rather than earlier and weaker.”
There are around 1.1 million people in gig work in Britain, more than half of whom work as taxi drivers, delivery couriers, and in on-demand skilled building trades, cleaning, removals and DIY, according to the Royal Society of Arts.
