The Gig Economy: Courier On Bicycle Delivering Food In City

The Gig Economy: Modern Working Practice or Old Fashioned Exploitation?

Few aspects of the world of work have been subject to greater debate in recent months than that status of those working in the gig economy. Try to even find a definition for this term and you will be quickly plunged into the controversy which surrounds it. It is a term which describes a labour market characterised by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs. Depending on your point of view, it is either a working environment that offers flexibility with regard to employment hours, or it is a form of exploitation with very little workplace protection.

In the gig economy, instead of a regular wage workers get paid for the “gigs” they do, such as a food delivery or a car journey. The jobs involved are diverse and although media coverage may give the impression that it is bicycle couriers and taxi drivers that form the majority of gig economy workers, the impression is a false one. In 2017 it was estimated that 1.1 million people worked within the gig economy in the UK and that 28% of them work in the fields of accountancy, law and professional services, 18% in skilled manual jobs such as building and plumbing and only 9% were couriers or drivers. It is now currently estimated that five million people are employed in this type of capacity in the UK which represents a massive increase in just 12 months.

Proponents of the gig economy claim that people can benefit from flexible hours, with control over how much time they can work as they juggle other priorities in their lives. The huge expansion in the numbers of workers entering the gig economy over the last 12 months speaks for it being attractive as a working choice. In addition, the flexible nature often offers benefits to employers, as they only pay when the work is available, and don’t incur staff costs when the demand is not there.

Workers in the gig economy are classed as independent contractors which means they have no protection against unfair dismissal, no right to redundancy payments, and no right to receive the national minimum wage, paid holiday or sickness pay.

It is these aspects that are proving contentious.

Over the past eighteen months, a spate of decisions by the Employment Tribunal and most recently the Supreme Court have been reported in the national media and have polarised public opinion on workers’ rights in the gig economy. The decisions have seen so-called self-employed bicycle couriers, Uber drivers and plumbers confirmed as having rights as workers.

The distinction between self-employed contractor and worker is a crucial one. A self-employed contractor, someone running a business and recruiting customers and clients who is genuinely in business on their own account, is not protected at all. A worker, whilst not an employee, is a category of self-employed individual entitled to basic rights such as paid holidays, minimum wage and protection from discrimination. By presenting a worker as a self-employed contractor, regardless of the reality of the working relationship, a company therefore not only cuts costs but also decreases the risk of a claim being brought against them by a worker.

Due to the fundamental differences of protection for these three classes, employee, worker and self-employed contractor the question of employment status is crucial but in the case of atypical workers the position can be far from clear cut.

The recent high profile cases all arise from a similar situation where a company is able to offer work to “self-employed business people”, who work for them, often through an app, with no set schedule and are paid on a per-job basis. These workers have contracts which, on the face of it, present them as “customers” of the company (in the case of Uber) or “self-employed contractors” (in the case of City Sprint Ltd) who, because they are not employed by the company, fall outside the normal rights and protections afforded to employees.

But very often these workers are not able to control how or when they invoice their client (or indeed for how much), they are required to wear a uniform and are not able to send someone else to work in their place.

In each case the Courts have closely scrutinised the contractual relationships between companies such as Uber, Hermes and Pimlico Plumbers and those who work for them. Looking at the facts of the relationship rather than the contracts that create them, the Tribunal has found again and again that the contracts provided by the companies were obfuscatory and that they masked the true nature of the employment relationship which in fact is simply that of employer and worker. These cases all demonstrate how fact-sensitive the decisions are but they do show the willingness of the courts to look behind artificial contractual arrangements to the reality of the legal relationship.

But is this purely a cynical and commercially driven attempt by businesses to deprive workers of basic rights or something more complex? The argument presented by various organisations from “gig economy” companies right through the government and Matthew Taylor (who conducted a review of modern employment practices for the government) is that the problem is a confusion in employment law, or the inability of the law to keep up with the times, which can result in workers being inadvertently deprived of rights to which they are entitled. However, the growing body of case law on this topic suggests that the law is pretty clear and some companies are clearly on the wrong side of it.

If employment law is both clear and able to keep up with the times, and yet hundreds of thousands of Britain’s low-paid workers are still unable to enjoy basic rights such as minimum wage, paid holidays and trade union representation, it is a rather clear indication of a problem with enforcement.

It has been widely reported that the gig economy is starting to hit government revenue by reducing the income tax intake. In November 2016 The Office for Budget Responsibility (OBR) published a report estimating that in 2020/21 the gig economy will cost the Treasury £3.5bn.

In a response to the Taylor Review into working practices, pressure has been increasing on the government to address enforcement and for an overhaul of employment rights to improve conditions for millions of workers, including those in the gig economy. The proposed changes would include stricter enforcement of holiday and sick pay rights, and higher fines for firms that breach contracts or mistreat staff. However, draft legislation is yet to be produced.

Fitchett & Co, Employment Law Specialists, are able to offer employment law advice and support to employers who have been affected by any of these issues. Call 01483 243 587.