The gig economy is so called because those engaged in it work on the flexible basis of 'one gig at a time' to create a labour market which is characterised by short-term contracts or freelance work, as opposed to permanent jobs.
It is estimated that five million people in the UK work in the gig economy, typically in industries such as food and goods delivery and taxi driving. Companies who deliver their services in this way include Uber, Deliveroo, Hermes, Pimlico Plumbers and City Sprint.
According to figures produced by the companies which operate in this way, many people like the flexibility offered by this type of work. Deliveroo claims that 85 per cent of their workers take the work on as a second job and work on average of 15 hours a week for them. Uber says that 94 per cent of its staff like working their own hours so that they can prioritise their lives around their work.
From the company’s perspective it helps to keep costs down as they don’t pay when the work is not there. Typically a worker will log on to a website operated by the company and then accept work and tasks during the time that they are logged on.
It is not all plain sailing, however, the gig economy has problems and detractors and is being scrutinised by the Law Courts, so how fair is it?
People working in the gig economy are treated as independent contractors, and as such, are not entitled to the minimum wage (although most companies claim that they pay this), protection from unfair dismissal, redundancy, nor do they receive paid holiday or sickness pay.
HMRC is also anxious about the sector because it does not make collections through PAYE and neither the workers or the gig economy companies pay any NI contributions.
Increasingly people working in this sector are bringing claims to seek a ruling that they are employees and are therefore entitled to many of the protections affordable to full time employees.
Uber has been told by the Employment Tribunal that its drivers are in fact workers. The Tribunal rejected Uber’s argument that the drivers were working directly for the customers and that the Uber App merely facilitated that work or provided a platform for drivers to contract with customers.
The Tribunal rated that Uber:
- Could amend drivers’ terms unilaterally.
- Required drivers to accept and not cancel trips.
- Imposed numerous conditions controlling how drivers did their work.
- Subjected drivers to a rating system, which is effectively a performance management and disciplinary procedure.
- Should repay all losses, rather than 'self-employed' drivers bearing those losses.
City Sprint has also been told that one of its cycle couriers is a worker and there are similar claims pending against Excel, Addison Lee and e-Courier. A Tribunal found that the City Sprint courier was integrated into the business as a worker during the periods that she was logged into the company’s GPS system.
Deliveroo is facing a claim by courier riders who also seek an order that they are workers and should therefore be afforded basic protections.
Pimlico Plumbers lost its case in the Court of Appeal which found that a plumber was a worker and an employee for discrimination purposes. The plumber was required to perform the work personally and the degree of control exercised by Pimlico Plumbers and the integration of the worker within Pimlico Plumbers were consistent with Pimlico Plumbers being a customer or client of the business run by Mr Smith.
It is too early to say whether these recent Tribunal decisions represent a threat to the gig economy’s business model. We will have to wait and see whether companies in this sector are forced to make changes to their working practices, either to accept that their operatives are workers, or to make changes to their working arrangements to bolster the argument for self-employment.
The Taylor review, led by Matthew Taylor, is an independent review of employment practices. It will consider the implications of new models of working on the rights and responsibilities of workers, as well as on employer freedoms and obligations.
For more information on employment contact Mark Serby at [email protected]
