What is the future of the gig economy?

Think about the workplace twenty years ago, and you’re likely to conjure a very different image from what we see today. Everything we do is quicker, more dynamic and revolves around flexibility. This includes the way we look at employment.

These days everyone wants a positive work/life balance while at the same time being successful. Twenty years ago this may have seemed impossible, but no more. We live in a world where running a blog provides a stable income, the internet is full of free legal advice, and work related hacks and flexible working hours are considered the norm.

Some aspects of employment are not keeping up. Take the ‘gig’ economy, where it’s estimated that five million people in the UK work. With companies like Uber, Deliveroo and Hermes constantly growing in popularity, individuals are easily able to gain flexible working patterns under self-employed status and can chose to work when, where, and how they want, gaining pay for each ‘gig’ they do. Considering the modern values placed on flexibility in the workplace, it’s easy to see the appeal in this.

What’s the difference?

If we look at the differences between ‘self-employed’ and ‘worker’ statuses, we find some critical differences. A ‘worker’, is someone employed through a contract, either written or verbal, who must turn up to work whether or not they want to, and must perform tasks as laid out by their employer. They are entitled to basic employment rights such as the national minimum wage, holiday and sick pay, and rest breaks.

Individuals who are ‘self-employed’ receive no employment protection because they are their own boss, working when and where they chose.

While companies that offer roles under the gig economy pride themselves on the freedom and choice they offer, there are growing concerns that some businesses are abusing the self-employed label and taking advantage of loopholes. The reality is that many people engaged on this basis are specifically told when and how they are to perform their job, and are not permitted to work elsewhere. They may even be required to wear uniforms. This all goes against the very foundation of what self-employment status was built upon, and indicates a ‘worker’ relationship which means these individuals are entitled to far more rights than they’ve been receiving.

The legal challenge

It’s no surprise then that individuals engaged by these companies have challenged their self-employed status. As a minimum, they want to be regarded as workers to ensure that they are paid at least the national living wage for the hours they are available and receive holiday pay. The Tribunals have already seen claims against companies like Uber, Deliveroo, Pimlico Plumbers and Citysprint and there are many more waiting in the wings. So far, Tribunals are ruling against the companies’ position that these people are self-employed. Uber was the first major gig economy case to be heard and judges in the Employment Tribunal confirmed that drivers should be entitled to minimum wage, holiday and sick pay, rest breaks and an employer contribution to an auto-enrolment pension scheme as workers of the company. The decision is being appealed, but if judges find in favour of the drivers it could cost the company millions.

Government intervention

The importance of the issue has not been lost on the government either. In their 2017 manifesto, the Conservatives called for action, insisting that these issues could not be overlooked and that they would endeavour to make sure that employees of all statuses, including those currently making their living under the gig economy, would all be properly protected.

Shortly after Theresa May took office last summer she commissioned Matthew Taylor, Chief Executive of the Royal Society of Arts and former aide to Tony Blair, to analyse the evolving labour market. His review calls for ‘Workers to be treated like human beings, not cogs in a machine.’ He recommended a series of new protections for workers, including that employers will have to prove their workers can earn above minimum wage. The review also proposed new status of ‘dependent contractor’ which would sit between fully employed and self employed status. He concluded that if it looked and feels like employment, it should have the status and protection of employment. So major change is expected.

In the meantime, Elizabeth Maxwell of Thomson Snell & Passmore, employment law experts, advises “employers to review how they are engaging with individuals who they define as ‘self-employed,’ as the tribunals are quite happy nowadays to jump over the contract and look at what is in fact the true nature of the working relationship. We believe that many ‘self-employed’ individuals are in fact likely to have worker status and this can leave companies very exposed.”

Elizabeth Maxwell writes on behalf of Thomson Snell & Passmore. For any queries concerning employment law, please contact a member of the team.