‘So immoral’: gig economy workers forced to pay fee to receive their wages

Retail assistants have accused a gig economy firm of “holding them to ransom” by making them pay a fee if they want to receive their wages within a month.

A new payment system brought in by YoungOnes, which supplies “freelance” retail assistants to many well-known high street stores, charges gig workers 4.8% of their earnings to be paid in one minute or 2.9% to be paid in three days. If they decline, they typically have to wait 30 days. Previously the workers were paid in three days, without a charge.

Tom Gillam, who has worked at least six shifts at the Emma Sleep’s store in Manchester, said gig workers on low and irregular wages needed money quickly to buy essentials and pay bills. “People do gig work for short-term cash ... it feels like we’re being held to ransom,” he said. “It is so immoral it’s unreal.”

Gillam, 37, claimed some of the workers at the store were last week still waiting to be paid for shifts in late November and early December. “They can’t really badger their managers because working as a freelancer you have no voice, you might not get any more shifts if you are seen as outspoken.”

Another worker at the Manchester store said he was forced to borrow money from his family to buy gifts and travel home for Christmas. “It is unfair for people working on a low wage with reduced rights to be charged to get their money quickly,” he said.

Last month, the Observer revealed the growing use of gig economy workers without basic employment rights in the retail sector, a move the TUC had called “worrying”.

The minister for employment rights, Justin Madders, told the Observer he would be asking the Employment Agency Standards Inspectorate to investigate the allegations against YoungOnes. He added he would also be writing to the firm to demand answers. “We find it entirely unacceptable for employers to avoid their legal obligations by claiming someone is self-employed when they are not. Action that reeks of this exploitation is intolerable, and we will not hesitate to ask all relevant authorities to scrutinise such employers,” he said.

Concern is mounting that companies could seek to evade protections laid out in the government’s flagship employment rights legislation by recruiting gig economy workers. Liam Byrne, chair of the business and trade committee, which is examining the government’s employment rights bill, said: “We’re deeply concerned that companies will try to get around the law and continue to exploit vulnerable workers by pretending they are self-employed when they should enjoy the full protection of the law.”

The bill will bring in a range of new workplace rights, including immediate protection from unfair dismissal and the right to guaranteed hours for anyone on zero-hour contracts. It will also abolish the waiting period for statutory sick pay, set at the first three days of illness, and give workers the right to unpaid paternity and bereavement leave as soon as they start a new job.

However, the new protections will not apply to the estimated 4.4 million people working in the gig economy.

The government has promised to consult on a simpler two-tier employment framework, which distinguishes between genuine self-employment and all other types of workers, but nothing has been published yet.

Last week Margaret Beels, who is the government’s independent director of labour market enforcement, told the committee that the UK’s complex three-tier employment status system – which includes employees with full rights, casual workers with limited rights, and freelancers with no rights – was being abused. “Having three levels of status allows people to engage in sharp practice, shifting workers around between those [levels],” she said.

Beels called on the government to act more quickly: “I really would like to see the government stepping up to doing more – you can probably consult till the cows come home on this issue, and it’s about time to do something about it.”

James Medd, YoungOnes’ chief operating officer, said the new payment system allowed freelancers to choose between standard payment terms at no extra cost or pay for faster options. “We deeply value the freelancers on our platform and understand the challenges they face, particularly when it comes to payment timelines,” he added.

Medd said freelancers choose to work through YoungOnes as it offers them independence and a flexible solution tailored to their needs. “They have the freedom to decide when, where, and with whom they work,” he said.

Emma Sleep said it took the allegations very seriously. It said “payment issues” were reported by some workers but the team had been paid for several weeks now. “Emma is committed to continuously improving the working experience for freelance employees in our stores while ensuring full compliance with labour laws,” said a spokesperson.