New legislation was proposed today to crackdown on companies using the excuse of self-employed status to avoid providing workers with basic rights and benefits.
A joint report from two House of Commons select committees argues giving employees presumed 'worker by default' status would help ensure firms are not exploiting staff for cheap labour.
This would require them to prove their workers are self-employed, reducing the number of staff enduring the "unacceptable burden" of expensive and risky court cases to obtain their rights.
In addition, estimates by NOW: Pensions reveal the new legislation could require employers to provide £182m in contributions to workers' pension pots every year from April 2019.
"Currently, these 1.3 million workers have few rights and are entirely excluded from the auto-enrolment programme due to their self-employed status," NOW: Pensions director of policy, Adrian Boulding, said.
"Giving those employed in the gig economy worker status will mean that a greater proportion will have the opportunity to save into a workplace pension helping to improve their quality of life in retirement."
The Work and Pensions, and Business, Energy and Industrial Strategy committees' report also calls for a loophole allowing agency workers to be paid less than permanent employees to be closed.
In addition, the government should rule out introducing any legislation that would undermine the national minimum wage, with the committees arguing those on zero-hour contracts should be paid more.
Enforcement bodies would be given the power to issue fines for noncompliance under the proposals, inspecting labour practices more frequently, and ensuring the risks of being caught outweigh the potential gains.
Business, energy and industrial strategy committee chair, Rachel Reeves, said: "Responsible businesses deserve a level-playing field to compete, not a system which rewards unscrupulous businesses.
"We need new laws but also much tougher enforcement, to weed out those businesses seeking to exploit complex labour laws, and workers, for their competitive advantage."
