Employment rights in the gig economy

Concerns about whether workers in the ‘gig economy’ are adequately protected by employment law have risen up the political agenda recently, driven by high-profile tribunal claims against Uber and CitySprint.

In the Commons, two Select Committees launched separate inquiries into the gig economy and workers’ rights, while Theresa May commissioned an independent review of employment practices led by Matthew Taylor, Chief Executive of the Royal Society for the Arts (RSA).

With the Taylor Review expected to report in the summer, and the commitment in the Queen’s Speech to enhance rights and protections in the modern workplace, these concerns are set to occupy policy-makers well into the new Parliament. Central to this will be the question of whether the law’s approach to ‘employment status’ is fit to cope with new forms of work associated with digital platforms.

What is the gig economy and how many people work in it?

There is no single definition of the ‘gig economy’, but the term usually refers to businesses that operate digital platforms – typically apps – which allow individuals to undertake discrete jobs, or ‘gigs’, for end-users. Well-known companies providing access to these platforms include Uber, Deliveroo, TaskRabbit, Hermes and CitySprint.

National statistics do not record the number of workers in the sector, but recent research by the RSA and Ipsos MORI estimated that 1.1 million people work in Britain’s gig economy.

Chart showing increase in self-employment since 2008

The challenge for employment law

There is growing concern that gig workers are often wrongly classified as self-employed and thus unlawfully denied employment rights.

The legal tests for distinguishing between employees, who have employment rights, and the self-employed, who have none, are found in case law. The tests look at the type of contract between the working individual and their ‘employer’. Employees are those who work under contracts of service submitting to their employers’ control, while self-employed contractors work under contracts for services, and are in business on their own account. ‘Worker’ status, a hybrid category in-between employee and self-employed, is similar to employee status. Workers have greater autonomy than employees but are nonetheless dependent on their employers for work and are not in business for themselves.

Working practices in the gig economy cast doubt on whether these tests can afford employment rights to gig workers in a predictable manner. Platform operators rarely exert enough control over gig workers to confer ‘employee’ status, as gig work is characterised by flexibility over when and where one works. The thornier issue is whether these individuals are workers in the legal sense, or self-employed.

Platform operators, such as Uber, often categorise gig workers as self-employed, arguing that they serve their own clients. On this analysis, Uber drivers run their own micro-businesses, and lack employment rights. When that argument was presented to the employment tribunal in 2016, in Aslam, Farrar and Others v Uber, the judge described the “notion that Uber in London is a mosaic of 30,000 small businesses linked by a common ‘platform’” as “faintly ridiculous” and found the claimants to be workers. Similar arguments were presented to the employment tribunal in Dewhurst v CitySprint, and again failed.

Chart showing different roles in gig economy

The problem is that gig work operates at the border between worker and self-employed status, and the legal tests policing that border are difficult to predict. This lack of certainty, coupled with the tax advantages of engaging self-employed contractors and with the freedom from employer obligations, incentivises platform operators to classify their gig workers as self-employed. Gig workers, who may or may not be workers in the legal sense, can only determine their status – and thus their access to rights – via the tribunals.

The way forward?

There is growing agreement with the Work and Pensions Committee’s conclusion that the “current ways of categorising workers are creaking under the weight of the changing economy”. Various solutions have been proposed to address this. The committee recommended that worker status should be the default, with the employer shouldering the burden of disproving it, and Labour’s 2017 manifesto echoed this.

The RSA recommended something similar, combined with a dedicated advice service and a free expedited tribunal procedure for establishing employment status. Submissions to the BEIS Committee’s inquiry, cut short by the election, made a range of recommendations, from preserving the status quo to lowering the threshold for worker status. The Taylor Review is likely to provide additional recommendations in the summer, with the potential for legislative change to follow.

This article is part of Key Issues 2017 – a series of briefings on the topics that will take centre stage in UK and international politics in the new Parliament. More Key Issues posts will be published on this blog throughout June, subscribe via the homepage to get instant alerts. 

Picture credit: Delivery Bikes by Dan ThompsonCreative Commons Attribution 2.0 Generic (CC by 2.0)

Employment status

A working individual’s employment rights are determined by their employment status. Broadly speaking, there are three categories:

• employee

• worker

• self-employed

Employment status is in turn determined by the contractual relationship with the ‘employer’
and its reality in practice.

Employees have the full complement of rights, including protection against unfair dismissal and redundancy and parental leave rights.

Workers have fewer rights but retain some of the most basic ones, including working time, annual leave and minimum wage rights.

The self-employed fall outside employment law, although may be entitled to related rights (e.g. under discrimination and health and safety law).