12 May 2017 by

Employment Status and the Gig Economy – the debate!

With the number of people in London involved in the “gig economy” now sitting at 65,000 and the Government having commissioned a report into workers’ rights and practices, now is a good time to take another look at the issues.

The phrase gig economy was coined at the height of the financial crisis in 2009, when the unemployed made a living by “gigging” or working in several part time jobs whenever they could. The phrase has stuck and is described as “a labour market characterised by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs”.

Receiving no regular salary, workers of companies such as Uber and Deliveroo are paid for each ‘gig’ they do, i.e. each meal delivered or each car ride given, and are being classed as independent contractors. The companies argue they do not employ the workers. They make their money by taking commission from the workers’ earnings.

Workers in the gig economy may “lose out” on rights that ordinary employees take for granted, such as the right to receive the national minimum wage, rest breaks and paid annual leave. Some employers argue that the business model makes it difficult to deal with the self-employed individual, who frequently has complete flexibility within the business to come and go providing ad hoc services for the business over a period of time. Added to that, some employers are now being confronted with a worker/employee status claim and facing the consequent costs of having to go through the Employment Tribunal, taking precious management time and incurring expense.

Although not a new concept, there have been a number of cases recently in the tribunal with workers disputing their status. There is more “pushback” against this lack of status.

Possibly in an attempt to defeat claims by workers, arguing they should be categorised as employees, Deliveroo has even developed a new set of words and phrases that should and should not be used to describe its riders and their working practices e.g. “onboarding” not “hiring” or “supplier agreement review” not “performance management warning” designed deliberately to steer its staff away from using references typically associated with employment status.

Rather than traditional length of service for employees, employers are coming up with alternative ways for workers to accrue “rights”. For example Uber drivers completing more than 500 trips will be eligible for payments of up to £2000 in cases of sickness or injury for 2 weeks or longer in return for a £2 weekly premium, which Uber now subsidises.

In January this year, it was determined by the tribunal ruling that Maggie Dewhurst, a bicycle courier at City Sprint, was “a worker of [City Sprint] and… it unlawfully failed to pay her for two days’ holiday”.

Further, the Uber judgment that stated its drivers are “workers” and entitled to be treated as such is being appealed by Uber and will be heard in September this year.

So, does the Government need to think differently? Should the law be changed to offer workers greater protection? There is a school of thought that those who aren’t providing labour as part of their own business but who work for, and are part of, another person’s business should be protected by employment law. Those who counter this argue that the distinction is still not clear enough. Should there be new “employment tests” to define employee status such as subordination or control? Should being defined simply as a “worker” entitle the individual to then be entitled to the full suite of employment rights?

If the law is changed, there is likely to be a knock-on effect on the SME or Owner Managed Business. What will these effects be and would they be welcomed? Importantly does the individual want to be an employee? A freedom to choose their own hours is cited by 94% of Uber drivers as being a positive reason for remaining with the company.

One thing we can predict, this debate is far from over and following the Government report changes are bound to follow.

If you would like to discuss worker status or any other employment law issue affecting you please contact one of our solicitors in the Employment team here.

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