The gig economy has grown over the years and for many the system of working offered by this phenomenon, has been beneficial. Individuals have been able to enjoy the flexibility that working on a “per job basis” has brought. Whilst businesses have benefited from the ability to tap into a wide pool of talented, motivated individuals able to provide services to meet the fluctuating demands and needs of the business.
Until quite recently, individuals working in the gig economy did so on the understanding that their legal status when undertaking any assignment, or job would be that of self-employed. This meant that they did not receive any of the legal employment rights afforded to employees or workers. For a number of years businesses using the gig economy platform have been able to develop and grow their business offering, without being burdened with the costs associated with employing staff. Private passenger transport and logistics businesses such as Uber, Addison Lee, and CitySprint are just a few of the businesses that have used the gig economy platform to advance their business objectives.
However, following the Taylor Review in July 2017, the highlights of which we reported here, and two recent employment tribunal decisions relating to the legal status of drivers working in conjunction with Uber and Addison Lee, a degree of uncertainty is now associated with the legal status of those working in the gig economy. Are they employed or self-employed?
The Taylor review, put forward an answer to this question when it made strong recommendations that those working as self-employed in the gig economy should be relabeled as, “dependent contractors”. Recent tribunal rulings stated that these self-employed individuals fell within the definition of “workers”. Regardless of the new name used to categorise these self-employed individuals, one thing is clear and that is those who are currently self-employed in the gig economy may soon have a change in their legal status.
A change in legal status would be coupled with access to basic worker rights. Businesses would then have additional costs placed on them if they continued their business operations using labour sourced from the gig economy. These costs would be National Minimum Wage (NMW), holiday pay, statutory sick pay and “family friendly” statutory payments e.g. maternity pay (if the worker met the criteria). In addition workers in certain circumstances would also be entitled to automatic pension enrolment.
The tribunal rulings in the Uber and Addison Lee cases mentioned above, are not binding on other tribunals, so there was no immediate need for other businesses to change the legal status of the individuals who provide services to their businesses. However, it should be noted that Uber are presently appealing to the Employment Appeal Tribunal (EAT) against the tribunal ruling which stated that the drivers working with their business are “workers”.
Any decision made by the EAT must be followed by employment tribunals hearing cases on similar facts. If Uber’s appeal is unsuccessful, businesses operating in a similar manner to Uber, will need to treat their drivers as workers too. For many businesses this outcome will have far reaching financial consequences as paying NMW and providing other basic workers’ rights will drive up their operational costs. With this in mind, it is hoped that the EAT will take their time to provide a detailed and carefully reasoned decision.
Another important judgment to look out for is the Pimlico Plumbers appeal to the Supreme Court. We reported on that case here. This is an appeal to consider whether a tradesman was a worker or an independent contractor. Again the outcome of this ruling will bind lower courts and must be followed by businesses.
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“The ruling could threaten to significantly increase the operating costs of companies, like private hire and delivery firms, that use people who work on demand or those in the gig economy.”