One of the biggest firms in the so-called "gig economy" has warned that moves to limit flexible work could drive people away from the sector.
Food delivery service Deliveroo said the Taylor Report offers a "great opportunity" to make the UK's outdated employment law fit for the 21st century, but warned any reforms introduced in its wake should be "pro-growth".
But unions complained the report's recommendations do not go far enough to protect workers in the casualised modern economy.
A lawyer representing some Deliveroo riders and Uber taxi drivers said the position of gig economy workers could be made worse by a recommendation to allow employers to pay less than the minimum wage during times of low demand.
The report's recommendation of a new category of "dependent contractor" is "essentially a relabelling of the current 'worker' status with few additional rights" which "may only serve to confuse individuals as to what rights they do have", said solicitor Nigel Mackay from law firm Leigh Day.
"The review does include some positive ideas including penalties for serial offender employers who continue to deny workers their rights where colleagues have succeeded in a similar claim," said Mr Mackay.
"Alarmingly, however, some of the proposals may make the position worse for gig economy workers, contrary to the Government's suggestion that it is seeking to enhance workers' rights."
A spokesman for Deliveroo said the company is ready to work with Government to end the trade-off between flexibility and security of employment.
But the spokesman added: "The Government needs to ensure that any new measures are pro-growth so that companies can continue to expand and create well-paid opportunities for people in the UK. The Government should be under no illusions that any moves to restrict flexibility could undermine the very thing that attracts people to work in this sector."
Andrew Byrne, head of policy for Uber in the UK, said: "The main reason why people say they sign up to drive with Uber is so they can be their own boss. With our app, drivers are totally free to choose if, when and where they drive with no shifts or minimum hours. We would welcome greater clarity in the law over different types of employment status."
Richard Laughton, chair of the trade body Sharing Economy UK, said some of Taylor's proposals will concern firms.
"Changes to the classification of participants in the gig economy and application of the minimum wage could have negative unintended consequences for individuals who value the choice and flexibility working in such a way provides," he said.
But Stefan Baskerville of the New Economics Foundation think tank, said the report was "silent" on the stress caused to workers by employers' new ability to monitor their performance electronically.
"That could mean greater productivity, but it also means a huge shift in power and an increase in the control employers can exert on employees," said Mr Baskerville. "We therefore urgently need appropriate limits on surveillance and monitoring in the workplace."
The Resolution Foundation think tank for low-paid workers said the report's most significant recommendation is a new minimum overtime wage, which could boost workers in retail and social care.
"A new minimum wage for overtime, forms of which already operate in the US and Australia, would be a big change for low earning workers struggling with tight budgets and insecure earnings," said the Foundation's director Torsten Bell.
"The boldness on overtime contrasts with a timid right for zero-hour contract workers to request guaranteed hours, something that can all too easily be rejected by employers."
GMB union general secretary Tim Roache said: "Given the epidemic of precarious work in the UK, this report simply does not go far enough in fixing a broken system that gives employers the choice of whether to treat their workers fairly or not.
"We need regulations and proper enforcement - until we get that, we will all continue to pay for shareholder profits though lost tax revenue and the knock-on effect poor work has for public services and our communities."
Roy Rickhuss, general secretary of the Community union which represents many self-employed workers, said: "Matthew Taylor is right to say that too many workers have been left feeling like cogs in a machine rather than human beings.
"Trade unions should continue organising the self-employed and the gig economy, and should seize this opportunity to work with Government and employers to ensure that everyone has access to decent and fair work."
Terry Scuoler, chief executive of manufacturers' organisation EEF, said: "Industry will welcome the recognition that flexible ways of working are necessary to protect the UK labour market and can be mutually beneficial for both 'employers' and individuals.
"There is, however, little evidence in our sector that the current regulations are either not working or in need of change, and any reduction in flexibility will harm UK businesses in the challenging circumstances they face."
Ufi Ibrahim, chief executive of the British Hospitality Association, said: "We are pleased that the Taylor Review has recognised that zero-hour contracts are welcomed by many workers as well as employers for their flexibility.
"The review talks of minimum wage increases for people on zero-hour contracts. We believe any increase must be set by the Low Pay Commission having access to all the available facts, and not by politicians."