Personal Law
January 30, 2019

Gig economy - Self employed or employed?

The number of companies being held to account by their employees/contract workers regarding employment status, is growing. First, Uber were challenged and their workers gained new employment rights and assurances.

In November, a tribunal upheld the ruling in an earlier case brought by three drivers that claimed they were entitled to a minimum wage from the time they ‘logged on’ as ready to accept paying fares, to the time they logged off. The ruling is another nail in the gig economy coffin, where workers are contracted on a ‘self-employed’ basis, which excludes them from claiming basic employment rights such as a minimum wage, holiday and sick pay, and union representation.

Restructuring businesses and employer responsibilities

Addison Lee is examining the ruling very carefully, as it could have a massive effect on their fleet of nearly 4,000 drivers and delivery couriers. The company points to the high level of driver satisfaction reported in a survey they took, but this has little or no bearing on the legal situation they now potentially find themselves in, which is why they may have to completely restructure their business from a very fluid gig-economy model to a system that treats all staff as ‘employees’ and not contractors.

This could have a big knock-on effect on taxation too, with Addison Lee potentially responsible for tax, National Insurance and pension contributions for all of its drivers. Put simply, this ruling could cost the company millions.

It comes after a flurry of cases against companies throughout 2017 and 2018 that have challenged the idea of the gig economy, and in the majority of cases, the law has found in favour of workers, not the company. The exception is the Deliveroo case in 2017, where the courts found that takeaway delivery drivers were legitimately self-employed. This result has recently gone through a judicial review, and the findings came out in favour of Deliveroo, which complicate things even further.

How many people does this affect?

It’s estimated that over a million UK workers are employed in the gig economy, with little or no workers rights due to their ‘self-employed contractor’ status. Now, while this situation may suit some people who prefer to have a more flexible working schedule, there are many who would like the same degree of protection that fully employed workers enjoy, particularly over the holy trinity of minimum wage, holiday and sick pay.

Currently, self-employed contractors cannot demand that their employer pays them the national minimum wage, and most delivery or courier drivers work on a job-by-job basis with varying rates worked out at a per-mile rate, rather than a per-hour amount.

Despite the catchy media term of ‘the gig economy’, this situation is nothing new. In the 1980s and 1990s thousands of couriers buzzed around London’s streets, delivering packages paid for at set rates per mile, mini-cab drivers took fares at per-mile or per-minute charges, and hundreds of thousands of ‘temps’ worked from one week to the next via agencies. The gig economy has been around for a lot longer than you’d think, albeit in various different guises. Today, though, the rights of workers are much higher on the agenda, not just because workers are tired of the uncertainty of having a ‘gig’ rather than a proper ‘job’, but because of improvements in human rights and employment legislation.

A new way of working

In short, large companies that have relied on zero-hour contracts, ‘self-employed contractors’ and other more flexible working arrangements will have to take on board that, in every case so far brought (with the exception of Deliveroo), the law has found in favour of the workers. Perhaps, then, it’s time that these companies rethought their policies and brought them into the 21st century, ensuring that everyone, from a zero-hour contract shelf-stacker, ‘self-employed delivery driver to the CEO, has the rights and the working conditions that they deserve.

To discuss any employment matter you can contact Karron Foot or the wider Commercial and Dispute Resolution Team on 01892 526 344.

The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.

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