What do you know about the ‘gig economy’?

13 September, 2017
by: Cripps Pemberton Greenish

This week, the Cripps Pemberton Greenish trainee solicitor blog team caught up with Issy Benedict to find out more about the ‘gig economy’.

Have you ever ordered a takeaway meal from Deliveroo or a taxi via Uber?  These are just two of the companies embroiled in 2017’s top employment story, the ‘gig economy’.

So, what is the gig economy?

Uber has been in the news regularly throughout the last year for a variety of reasons. It received the most coverage due to the Employment Tribunal’s ruling that saw drivers winning the right to be classed as workers rather than self-employed – although Uber has been granted the right to appeal.  This is all tied up with the gig economy.

The gig economy’s name derives from the fact that those who work in it get paid per ‘gig’ they do. Examples include food deliveries and taxi journeys.  It is estimated that five million people are employed in this economy.

The gig economy has undergone steep growth over the past ten years due the model it utilises by which ‘self-employed’ contractors are used to scale up businesses fast in response to customer demand. 

What does this mean from an employment perspective?

Broadly, an individual working in the UK can be categorised as either: an employee; a worker; or a self-employed person (i.e. an independent contractor or consultant).  What class you fall into will have an impact on the statutory protections and benefits available to you.  For example, to have the right to claim unfair dismissal, redundancy pay or statutory notice you must have employee status.  On the other hand, a person who is classed as self-employed has few statutory rights. They are only protected under workplace health and safety laws, and have limited discrimination and whistle-blower protection.

Not only does employment status impact upon the statutory protections and benefits an individual receives, it will also have an impact on taxation.  However, HMRC does not recognise ‘worker status’. This means an individual may be self-employed for tax purposes, but still classed as a worker for employment law purposes. This a sticking point within the gig economy.

Why is this important?

Before the high profile cases of Uber (Aslam and others v Uber BV and others), City Sprint (Dewhurst v CitySprint UK Limited) and Pimlico Plumbers (Pimlico Plumbers Ltd and Mullins v Smith)  anyone working in the gig economy was likely to be classed as self-employed for employment law purposes.  For some, this can be seen as a good thing due to the increased flexibility of hours it provides. In other respects, especially in relation statutory rights, it is bad.  These cases (although they are being challenged/appealed) showed that those classed as self-employed by their employer companies, were in reality workers who therefore should receive rights and benefits such as the national minimum wage and holiday pay. 

What this means going forward…

It remains to be seen what will happen to this sector in the years to come.  The BEIS Committee, BEIS and the Work and Pensions Committee are currently investigating the gig economy. Recommendations include allowing all categories of worker to be entitled to a unified set of rights, and introducing a legal default position of employment status whereby there is a presumption of employment status unless the employer proves otherwise.

Companies operating within the gig economy will need to keep up to date with latest court decisions to ensure their working practices reflect the legal position.