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Theresa May has ruled out banning zero-hours contracts, claiming it would “harm more people than it would help”.
The Prime Minister pledged to ensure companies did not exploit workers, after a major review recommended action to improve job security among employees without contracts.
But she insisted Britain must avoid “overbearing regulation”.
In her first major speech since losing her Parliamentary majority in the June 8 election, Mrs May said she would would act to protect the rights of workers, following the publication of Matthew Taylor’s report on the so-called “gig economy”.
She appealed to other political parties to put forward their proposals for debate and discussion ahead of the Government’s full response to the report later in the year.
The Taylor Review, published on Monday, recommended the creation of a new category of worker in employment law called a “dependent contractor” to cover those who are not full-time employees but do not enjoy the autonomy traditionally seen as part of self-employment.
The PM said the Government’s response would be guided by the aim of ensuring “the interests of employees on traditional contracts, the self-employed and those people working in the ‘gig’ economy are all properly protected”.
But she said the UK should avoid “overbearing regulation”, retain flexibility in the labour market and remain “a home to innovation, new ideas and new business models”.
Mrs May said it was important to ensure zero-hours contracts do not allow employers to “exploit” workers, but rejected Labour’s call for them to be banned, warning this would “harm more people than it would help”.
Mr Taylor – a former adviser to Tony Blair who is now chief executive of the Royal Society of Arts – set out seven “principles for fair and decent work”.
They included additional protections for workers suffering unfair, one-sided flexibility, stronger incentives for firms to treat workers fairly, and a more proactive approach to workplace health.
Launching the report in London, Mr Taylor said: “One-sided flexibility is where employers seek to transfer all risk on to the shoulder of workers in ways which make people more insecure and makes their lives harder to manage.
“It’s the people told to be ready for work or travelling to work only to be told none is available, it’s the people who spent years working for a company on zero hours contracts but who without a guarantee of hours from week to week can’t get a mortgage or a loan.
“It’s the people who feel that if they ever raise legitimate concerns about their treatment they will simply be denied the hours that they so desperately need.”
Mr Taylor said this would be tackled by asking the Low Pay Commission to explore higher minimum wages for hours that are not guaranteed, and giving people the right to request fixed hours and permanent contracts.
Companies will also be required to disclose how they respond to these requests.
“There’s nothing wrong with zero and low hours contracts but they should be a means to two-way flexibility, not a lazy way for those with market power to dump risk on those who lack that power,” he said.
Mr Taylor also found many gig economy firms should possibly be paying millions of pounds more in National Insurance contributions than at present.
But his report won a lukewarm response from unions and employment lawyers, who said it did little to help the growing number of workers in delivery and taxi firms such as Deliveroo and Uber.
TUC general secretary Frances O’Grady said: “I worry that many gig economy employers will be breathing a sigh of relief this morning.
“From what we’ve seen, this review is not the game-changer needed to end insecurity and exploitation at work.”
Unite union leader Len McCluskey said the recommendations must be matched by effective enforcement of the law, adding: “Without fully resourced enforcement then all we have from Mr Taylor and the Government is a dog that is all bark and no bite.”
The CBI’s Neil Carberry said: “The Taylor Review rightly recognises that labour market flexibility is a key strength of the UK economy, driving better outcomes for everyone.
“Businesses agree that flexibility must be matched with fairness, but building on our current approach, as the report concludes, is the right way forwards.”
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