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Will 2017 mark the end of the ‘gig-economy’?

Calendar January 4, 2017

The so-called ‘gig-economy’ has grown by 72% in London since 2010 according to the think tank The New Economics Foundation and with high-profile cases involving companies such as Uber, this new group of workers have shown UK Employment Law to be outdated when dealing with an ongoing liberalisation of the labour market. As a result, the Government have begun a review into the growth of the ‘gig-economy’ and its effects on workers’ rights.
So, what is the ‘gig-economy’? It’s essentially an ultra-flexible way of working that is based on the principle of taking on temporary ‘pay-per-task’ jobs rather than being of permanent regular service to an employer. Often ‘jobs’ are accepted via a smartphone app. Under current Employment Law rules that predate the notion of ultra-liberalised labour and are tailored to the historical ‘Employment Contract’, workers in the gig-economy do not fall happily within a distinct category of employment status and are typically categorised as self-employed or ‘independent contractors’. Consequently, these workers do not enjoy the employment rights that a traditional ‘employee’ would, such as the right to the National Living Wage or to not be unfairly dismissed. Thus, as the gig-economy has grown, a wave of Employment Tribunal disputes has begun in which staff of companies such as Uber, Deliveroo and MyHermes have challenged their employment status.
If we take the Uber case as an example. As far they are concerned, Uber are not a taxi company at all. To their minds, they are a technology company that does not provide transport but rather puts people in contact with drivers who can provide the transport. This is a subtle but rather important difference. When viewed in this way, the self-employed relationship seems perfectly correct; drivers pay Uber 20% commission for work found for them by Uber. This is not a new concept; many businesses pay a company for sales leads or other services. Conversely though, this is a too basic analysis of the situation, after all, Uber drivers are subject to user ratings that could determine how much work they get in the future. This would indicate that there is a degree of control by Uber over the drivers that means they rely on the work that Uber provides. Furthermore, Uber can block drivers from the app and drivers are not allowed to take on private jobs outside of the Uber app whilst on shift. The Uber drivers were deemed to be ‘workers’, this intermediate, category of employment status provides a basic floor of rights which being self-employed or an ‘independent contractor’ does not; such as a right to the National Living Wage and protection of the Working Time Regulations. As such, UK Employment Law could be witnessing a seismic shift in its approach to employment status and a recalibration of a system which hasn’t kept up with the liberalisation of the labour market.
The Department of Business, Energy & Industrial Strategy believes that five million people may now be working in the ‘gig-economy’. This is only likely to increase in 2017 and there are already several high profile cases on the horizon, including Uber appealing against the initial Employment tribunal decision. If you work in the ‘gig-economy’ or you own a business that has staff on ‘self-employed’ contract, you could be drastically affected by these developments. If you would like to find out more about this or you think that you or your business could be affected, give us a call on 0330 221 0684or email [email protected] and we can book you in for a free consultation.


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