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22nd September 2021

Stephen Morrall examines worker status in the gig economy in Economy Standard

Stephen Morrall examines worker status in the gig economy in Economy Standard

This article was originally published in Economy Standard and can be accessed here

The Gig Economy

What is the gig economy?

Jazz musicians in the 1920’s did gigs. In the financial crisis in 2009, the unemployed made a living by gigging or working several part-time jobs. In 2018, the Department for Business, Energy and Industrial Strategy (BEIS) defined the gig economy as the exchange of labour for money between individuals or companies via digital platforms that actively facilitate matching between providers and customers, on a short-term and payment by task basis.  The Taylor Review in 2017 described it as usually referring to people using apps to sell their labour. Irrespective of the degree of mechanisation, the gig economy involves a flexible relationship between individuals who work, the organisations which engage or manage them and the end customer. Depending on your point of view, the gig economy gives people the flexibility to work how and when they want; or it is a mechanism to exploit vulnerable people doing low paid, piecework jobs. The issues are, what is a gig worker and what level of protection should they enjoy?

Employment status

It is no longer simply a question of being an employee or self-employed. Since the 1970’s, a new concept of worker has been developed which includes both employees and anyone working under some other kind of contract to provide work or services. Confusingly, there is a different test of employment status for tax purposes. Under current employment legislation, workers who are not employees have reduced employment rights. For example, they do get the national minimum wage and paid annual leave and are protected against discrimination, but they may not be entitled to statutory sick pay, and they have very limited maternity and parental rights.

Because gig work is by its nature intermittent and uncertain, employers prefer using self-employed contractors so that they do not have to provide benefits or keep them on the payroll (though this advantage has been eroded by IR35 and the off-payroll working rules).  However, the cases have established that even self-employed people can be workers.

In the recent decision of Uber BV v Aslam and others (February 2021), the Supreme Court ruled that drivers engaged on a self-employed basis were workers within the meaning of the legislation. The written documentation between Uber and the drivers was of secondary importance. The purpose of the relevant legislation was to protect vulnerable individuals in a position of subordination and dependence in relation to the company which controlled their work. The greater the degree of control, the more likely it was that an individual was a worker; and in this case, because Uber exercised a very high degree of control over how its drivers provided their services, they were workers. This also meant that waiting time would be counted for the purpose of the drivers’ entitlement to the national minimum wage.

Each case turns on its own facts. The self-employed plumbers of Pimlico Plumbers and minicab drivers of Addison Lee have been classified as workers; but Deliveroo’s riders were not. This was because one of the characteristics of a worker is that their contract must require the services to be provided personally. Deliveroo allowed its riders to engage and provide a substitute to carry out their deliveries for them. Although the right was probably deliberately introduced to help Deliveroo to argue that the riders were not workers, the Court of Appeal accepted that it was a genuine right which some riders did use in practice.

Does the law need be reformed?

To distinguish between a genuinely self-employed contractor who has no employment rights and a self-employed worker who enjoys limited protection should not involve dancing on the head of a pin. Peoples’ livelihoods and mental health are at stake and the law needs to be simplified. In 2017, the Taylor Review recommended clarifying the meaning of worker and introduce the concept of dependent contractor, and clarifying the degree of control exercised by the employer.  Unfortunately, the government’s policy paper, the Good Work Plan (2018) did not clarify its strategy for reforming employment status.

This year, a private members’ Employment Bill had its first reading in Parliament.  Interestingly, it introduces a new definition of worker, as one who seeks to be engaged [or] is engaged, by another person to provide labour, and is not genuinely operating a business on his or her own account. This wording seems to be intended to cover a very wide range of relationships between the providers of labour and those wanting to engage them which may simplify the test of being a worker. It will be interesting to watch the Bill’s progress, but for the moment, worker status in the gig economy continues to be a thorny issue.