Representatives of "gig economy" firms Uber and Amazon have defended their policies not to pay employees workplace pensions, saying it was up to the government to force them to do so through legislation.
The two firms, along with fellow gig economy mainstays Deliveroo and Hermes, claimed their workers valued the flexibility that came with self-employed status above the benefits of full employment.
In a Work and Pensions select committee hearing yesterday (22 February), MPs interrogated the firms on their decision to operate employment contracts that allow them to avoid paying National Insurance, sick and holiday pay and workplace pensions.
Committee chair Frank Field told the firms' representatives they had "hit on a model where you escape most taxation that your competitors have to pay".
He asked the firms' representatives why taxpayers should "pick up the bill for core employees when you’re actually employing them in effect full time?"
Under current rules, workers on self-employed contracts do not benefit from the auto-enrolment regime - or any other workplace benefits - even if they work full time for one employer.
When asked whether app-based taxi service Uber would consider paying workplace pension contributions regardless, Andrew Byrne, head of public policy for the firm's UK business, said: "My understanding … is that that would be difficult under the current regime".
He added: "I think that would change if the government was able to say this is what we would like to offer, and it doesn’t compromise self-employment."
He said he thought Uber would comply with any new rules forcing it to pay its drivers pension contributions, saying the firm was "definitely up for doing interesting stuff".
He added that Uber had already negotiated a voluntary pension scheme deal for its drivers to pay into if they wished.
Lesley Smith, Amazon's director of public policy for UK and Ireland, was less clear, saying the firm "would certainly look at" any new auto-enrolment requirements.
Ms Smith claimed that the self-employed drivers for Amazon's delivery service, "Amazon Logistics", didn't want to become employees of Amazon because they "already had successful businesses".
When asked whether Deliveroo would contribute to a workplace pension if required by the government, UK and Ireland managing director Dan Warne said: "We would contribute to it as long as it doesn’t compromise the status of our riders.”
He added that if the government forced the company to class its delivery riders as employees, while it would not necessarily force the business to closed down, it would have a "significant" effect on the business model.
Carole Woodhead, chief executive of courier service Hermes, said the firm would comply with auto-enrolment requirements as long as they "did not compromise self-employed status".
However, she said the firm would not contribute to an employees' workplace pension if the government did not make it compulsory.
"We’re paying above that national living wage," she said. "The increment above the national living wage enables them to take up a private pension scheme.”
She went on: "There may well be a minority of people who want more security, but I would assert that the vast majority of courier drivers value the flexibility that comes with the self-employed model more than they would value a greater increase in security."
The gig economy business model came under scrutiny late last year when an employment tribunal ruled that drivers for Uber were not self-employed, and therefore had employment rights.
The issue is likely to figure prominently in the government's ongoing review of auto-enrolment, in which it has pledged to look at the areas of the workforce that do not benefit from auto-enrolment.
Groups currently excluded from auto-enrolment include the self-employed, low earners, and people with multiple jobs who do not earn more than £10,000 in any of them.
Responding to today's committee hearing, Aegon's head of pensions Kate Smith urged the government "to look to plug the gaps by extending the policy to groups who currently miss out on an employer pension contribution, including the growing number of gig economy workers".
"Without this the schism between the privately pensioned and unpensioned will continue to widen and the government will have to look seriously at how it ensures these people reach retirement age with sufficient savings," she said.
While much has been made of the growth of the gig economy, a recent report by the Resolution Foundation revealed the fastest growing self-employed sectors were in higher paid areas such as advertising and banking.
james.fernyhough@ft.com
