The Rights of Workers in the “Gig” Economy

The Rights of Workers in the “Gig” Economy

Published: 12 December 2016

The Rights of Workers in the “Gig” Economy

 There has been much talk and publicity recently about the “Gig” economy which is becoming widely popular. This type of arrangement consists of a working environment where temporary positions are common place and workers are paid for separate pieces of work.  Often companies will contract with independent workers to carry out these short term engagements. 

The Commons Select Committee on Business Energy and Industrial Strategy (previously BIS) has  launched an inquiry into the future world of work, focussing specifically on the Gig economy.

The inquiry follows news stories about working practices at Sports Direct and the use of agency staff at ASOS, Couriers at Hermes and those working in the on demand economy for businesses such as Uber and Deliveroo.

The inquiry will look at issues such as low pay, poor working conditions and the following terms of reference will be considered:

· Is the term “worker” defined sufficiently and clearly in law at present?  If not, how should it be defined?

· What should be the status and rights of agency workers, casual workers and the self-employed (including those working in the ‘gig economy’), for the purposes of tax, benefits and employment law.

· For those casual and agency workers, working in the ‘gig economy’ is the balance of benefits between worker and employer appropriate?

· What specific provisions should there be for the protection and support of agency workers and those who are not employees and who should be responsible for such provision- the Government, the beneficiary of the work, a mutual, the individual themselves?

· What differences should there be between levels of Government support for the self-employed and for employees for example, in relation to Statutory Sick Pay, Holiday Pay, Employment Pensions and Maternity Pay and how should those rights be changed to ensure fair protection for workers at work and what help should be offered in preparing those people who become self-employed and who should be offering such help.

· Is there evidence that businesses are treating agency workers unfairly compared with employees?

· Should there be steps taken to constrain the use by businesses of agency workers?

· What are the issues surrounding terms and conditions of employees, including the use of zero hour contracts, definitions of flexible contracts, the role of the low pay commission and minimum wage enforcement?

· What is the role of Trade Unions in representing the self-employed and those not working in traditional employee roles?

Ian Wright, the Chair of the Business Energy and Industrial Strategy Committee commented as follows:

“In our sports direct enquiry we exposed shocking examples of poor working practices, of agency workers paying less than the minimum wage and exploited through dubious voluntary schemes such as pre-paid debit cards and deductions from pay for insurance services.  In recent months we have seen growing evidence of agency workers and those working in the gig economy being exposed to poor working conditions.  This growing trend raises questions over employment status and lack of “worker rights”. 

The Gig economy is clearly becoming more widespread and many companies are adopting this type of working environment. This can be demonstrated from the Uber case which ruled that Uber drivers are workers under the Working Time Regulations 1998, National Minimum Wage Act 1998 and the Employment Rights Act 1996 and entitled to basic rights such as the National Living Wage, Holiday Pay and Sick Pay.

Uber was founded in the United States in 2009 and predominantly operates through its Smartphone App. There are around 30,000 Uber drives operating in the London area and 40,000 in the UK as a whole and the organisation has two million passengers registered to use its services in London.  This is the first time Uber has faced any legal action but since the decision Uber have subsequently lodged  an appeal. 

It is important to note that this ruling however, is not the end of the process as it is like that following any decision of the Employment Appeal Tribunal, Uber is likely to take the matter to the Supreme Court and any payment due to the workers will not be calculated until the entire process is over. 

Following the decision in this case, the Independent Workers Union of Great Britain (IWGB) has threatened legal action against Deliveroo, if it refuses their riders’ requests for union recognition and employment rights.

It is important to note that firms with large self-employed work forces may face scrutiny in respect of their working practices and Unite has announced that it will be setting up a new unit to pursue cases of bogus self-employment.

Further research by Citizens Advice has suggested that as many as 460,000 people could be falsely classified as self-employed, costing up to £340 million per year in lost tax and Employer National Insurance contributions.

It is anticipated that there will be a need for a complete review of the whole gig economy business model which is predominently based on companies using Apps and the internet to match customers with workers.  The actual firms do not employ the workers, but take commission from their earnings and many companies have developed huge global enterprises based on this model. 

The Uber decision has led to mixed views as many people do like the benefit of a flexible working environment and prefer to drive as and when they want and there is also the view that individuals should be aware of the arrangement at the outset and enter into it willingly.

The latest company to be hit with a legal dispute is City Sprint which faces claims at Central London Employment Tribunal to treat its freelance couriers as workers. The tribunal hearing commenced on 22 November 2016 and this is the first of four different courier firms facing claims which will be heard by the same judge. The other companies involved are Addison Lee,  eCourier and Excel whose cases will all be heard next year.  All of the cases were submitted by the Independent Workers Union of Great Britain, with City Sprint being judged as being the lead case. 

 Ultimately, these types of claims will have an impact upon a significant number of businesses and HMRC is setting up a new unit called the Employment Status and Intermediaries Team which will investigate firms. 

Although this type of working arrangement is beneficial and suits some individuals, it may not suit all and it is anticipated that more individuals will jump on the bandwagon and continue to make claims which will ultimately disrupt what has become a global business model.

It is anticipated that 2017 is likely to be an eventful year for the gig economy.

For further information and assistance regarding employment matters, please contact Amanda Hodgson on 0207 632 1435 or email amanda@fletcherday.co.uk

By Amanda Hodgson

Employment Partner

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.