One Gig-guide you can’t afford to ignore

By now, you may have heard stories about Uber taxi drivers having worker status, and courier staff bringing cases to Employment Tribunals. But what does this all mean in practice? And what can your business learn from Tribunals failing to favour employers?

What is the ‘gig economy’?

The term ‘gig economy’ describes a business framework which creates increased flexibility and autonomy for individuals and companies alike. In the current fast-paced, ‘on-the-go’ world we live in, this model provides opportunities for freelance workers who are not paid via a regular wage, but are paid for the ‘gigs’ they do ie, each journey or delivery. This model has been heavily criticised for a lack of job security and seemingly unfair working practices.

What’s the difference between an employee, a worker, and a self-employed contractor?

  • A self-employed contractor, save for basic health and safety and anti-discrimination entitlements, has no employment rights.
  • A worker is employed under a contract, and is entitled to certain employment rights such as the national minimum wage, paid annual leave, and protection from unlawful deductions of wages.
  • An employee on the other hand enjoys full employment rights, including protection against unfair dismissal, statutory redundancy pay and the right to request flexible working.

What cases have already come to centre stage?

In the latest string of cases surrounding the gig economy, a cycle courier from Excel has successfully claimed worker status, and was found to be entitled to paid annual leave. This follows cases involving Uber, CitySprint and Pimlico Plumbers, all of which the Tribunal found that individuals who were classed as self-employed, were in fact workers for the purposes of section 230(3) of the Employment Rights Act 1996, rather than self-employed contractors.

Why are Tribunals finding individuals to be workers rather than self-employed?

In each case which has come before the Tribunal, the findings are against employers. One key point has been whether the contract (which governs the working relationship) accurately reflects the reality of that relationship, or whether the contract attempts to disguise an employee or worker status.

In each case, the Tribunal found that the contracts did not mirror the reality of the working relationship. The companies exercised significant control and supervision, requiring individuals to give sufficient notice of absence, dictating where individuals worked, and providing fixed rates of payment which were non-negotiable. The Tribunal found there was unequal bargaining power between parties. In Uber, the Tribunal described the terms of the contractual documentation as ‘fiction’ and used ‘twisted language’.

The advice to businesses is to revisit and revise employment contracts to clearly describe expectations on both sides, and demonstrate the contracts in practice.

What cases are waiting in the wings?

In March, the first gig economy case hit the health sector when several blood couriers working for The Doctors Laboratory (providing services to the NHS) filed a claim at the Employment Tribunal. They argued that they were not self-employed, but in fact employees. This goes a step further than the previous cases in bypassing the worker status, and claiming the highest level of employment status.

Other groups working under the gig economy business model who want to take action include eCourier and DPD. Couriers from DX who work for Amazon and the US Embassy, and others have also started proceedings with ACAS to establish their worker status.

What’s next for employment law?

The Central Arbitration Committee (CAC) will look at the employment status of Deliveroo drivers in May 2017, particularly whether they can be classed as workers able to formally apply to a trade union for bargaining purposes.

The Government has committed to delve deeper into modern working practices, with the Prime Minister commissioning Matthew Taylor (the Chief Executive of Royal Society of Arts) to review employment practices, and suggest changes needed to keep pace with modern business models. This is in addition to the Government’s recent budget promises to increase National Insurance Contributions for the self-employed (which, despite now being revoked, indicates the prominence of employment status and workplace practices).

No doubt the ‘gig economy’ is a term we will be hearing more and more over the course of the year. The numerous cases in the pipeline, and the knock-on effect the existing cases means the principles of employment law are in the spotlight. Employment status remains a hot topic amongst employers, employees, workers and self-employed contractors alike.

Top tip: Now is the time to review your business model, especially if it is labour-intensive. Contact Justine in our employment team to review your contracts and processes to see if you can avoid future problems and stay ahead of competitors.

Note: Information was correct at the time of publishing.