A group of cross-party MPs are seeking to to introduce new rules for the gig economy aimed at giving Uber drivers, Deliveroo riders and others greater protections when working.
But business group the Confederation of British Industry (CBI) warned the measures would stop firms from growing and creating jobs, while GMB Union said they do not go far enough, highlighting the contentious battle over the future of work.
People deemed self-employed under current laws should be recognised as "workers by default" with the associated rights, putting the onus on the business to prove otherwise, a joint report from two parliamentary committees - both of which have been probing the gig economy and modern work - has recommended.
Stronger penalties against firms which break employment laws have been proposed while the government is being urged not to make changes that would undermine current laws on the National Minimum Wage and National Living Wage.
Greater guarantees on minimum wage should come via a premium rate on work that was outside contracted hours, coming under the remit of the Low Pay Commission, MPs said.
“Uber, Deliveroo and others like to bang the drum for the benefits of flexibility for their workforce but currently all the burden of this flexibility is picked up by taxpayers and workers," said Rachel Reeves, chair of the business, energy and industrial strategy committee.
Frank Field, chair of the work and pensions committee said: “It is time to close the loopholes that allow irresponsible companies to underpay workers, avoid taxes and free ride on our welfare system."
The recommendations, which will be put forward to Prime Minister Theresa May, follow a major independent report she commissioned, the Taylor Review.
Uber and Deliveroo, both of which gave evidence to the inquiries, say drivers and riders value the flexibility of being self-employed.
“Businesses believe we must have both flexibility and fairness in our jobs market, delivering good working conditions for all. The CBI and its members are ready to step up to deliver this, and will welcome ideas like a clearer statement of terms and conditions for all workers," said CBI managing director for people Neil Carberry.
“But many of the proposals in this report – such as on agency workers and employment status - will be a concern for firms all over the country. Based on a very limited review of the evidence, the Committees have brought forward proposals that close off flexibility for firms to grow and create jobs, when the issues that have been raised can be addressed by more effective enforcement action and more targeted changes to the law."
The committee has also called for a loophole known as the "Swedish derogation" which means agency workers can be paid less than employees doing the same job, something the Taylor review had called for.
“If these plans go ahead, they may make a small difference," said Tim Roache, general secretary of the GMB union which initially represented Uber drivers at a landmark employment tribunal last year.
"However the fact remains that without real investment in HMRC and a political will to get tough on rogue employers who are cheating the British taxpayer out of millions and reaping profits out of worker exploitation, then there will be no significant change."