Stephen Morrall and Annabelle Woosnam discuss the legal rights for gig economy employees to a pension in People Management

  • September 20, 2022
  • By Stephen Morrall, Solicitor Consultants and Annabelle Woosnam, Trainee Solicitor

Stephen and Annabelle’s article was originally published in People Management, 20 September 2022, and can be found here

What are the legal rights for gig economy employees to a pension?

Last year’s landmark Supreme Court judgement in Uber BV v Aslam made headlines across the media when it ruled that thousands of Uber drivers are “workers”, as defined by legislation, and not independent contractors. Accordingly, they are legally entitled to basic employment rights.

However, according to a recent Financial Times article, the Pensions Regulator chief executive has conceded that despite his calls for them to do so, ‘not all gig economy employers have done “the right thing” and offered pensions to staff’ in the 18 months since the Uber judgment.

So what does this mean for people working in the gig economy?

According to TUC figures, there are now 4.4 million people in the gig economy, who work on either zero-hour contracts or a piece-work basis. Many employers still go to great lengths to prevent their staff from becoming legally eligible for employee or worker status.  Although this may give greater flexibility to businesses, it disadvantages those who remain ineligible for basic employment rights, such as membership of a pension scheme and other benefits – one of the issues considered in the Uber case.

The term “worker” is defined by statute as someone who is either employed under a contract of employment or “any other contract … whereby the individual undertakes to do or perform personally any work or services for another party …”.  Difficulties have arisen in the interpretation of the second part of this definition.

Employers have attempted to avoid their obligations by describing individuals as self-employed in their contracts, i.e. neither a worker nor an employee.  This happened in Autoclenz v Belcher, where the contract described auto valeters as self-employed subcontractors.  However, the Supreme Court disregarded the contract because it did not reflect the reality of the relationship and determined that they were employees with full rights.

The Supreme Court in Uber clarified that the starting point of any analysis of a person’s status would be whether he/she fell within the statutory definition. The terms of the contract were relevant, but only one factor in determining the true nature of the relationship.

Thus, the court will first look for a contract between the employer and the individual, which can be written, unwritten or even implied.  The next question is whether the individual agreed to perform personally work or services for the employer.

To perform work personally means to do it oneself.  However, in some cases, the individual had the right to provide a substitute to carry out the work or services for them.  In other cases, the question turned on whether the parties owed mutual obligations to each other under the contract.  The imbalance in the bargaining power of the employers and individuals is also relevant.  In summary, each case will depend on its own facts. Inevitably, this has led to results that seem to be inconsistent and often incompatible with each other.

In Uber, the drivers claimed they were workers, not self-employed, and were therefore entitled to pension and other workers’ rights.  The court agreed with them. By contrast, when Deliveroo riders and Yodel delivery couriers brought similar cases, they were found to be self-employed. The differences in the relationships were quite nuanced and the public does not understand why people who perform remarkably similar jobs can have vastly different rights depending on their employer.

However, the fact remains that only employees and workers have statutory employment rights and many working in the gig economy remain out in the cold.  It should not be left to the Pensions Regulator to try and put moral pressure on companies to “do the right thing” by giving them worker status. If there remains confusion between the status of employees, workers and the self-employed, employers will be able to take advantage of individuals and avoid giving them what are now regarded as basic employment rights. The government urgently needs to reform the law and improve the lot of gig economy workers.

Related News

Mar 23, 2023
Stephen Morrall and Sophia Smout discuss firing someone for gross misconduct in People Management
Feb 20, 2023
Stephen Morrall discusses the impact of the four-day work week in TheWealthNet
Jan 30, 2023
Stephen Morrall and Sophia Smout examine the new rules on flexible working in People Management
Dec 12, 2022
Stephen Morrall comments on the new flexible working rights in Personnel Today
Oct 18, 2022
Stephen Morrall comments on gig economy rulings challenging pension enrolment in Law360
Jul 06, 2022
Stephen Morrall and Annabelle Woosnam discuss pensions in the gig economy, in Employee Benefits
Feb 11, 2022
Stephen Morrall comments on what COVID rules means for workers and employers in Mail Online, This is Money, Mail on Sunday, Daily Mail and MSN Money
Nov 30, 2021
Stephen Morrall and Aman Khokhar explore how employers can best determine worker status in People Management
Nov 17, 2021
Richard Baxter examines whether Brexit creates uncertainty for online software sales agents in Reports Legal
Oct 20, 2021
Partner Richard Baxter is attending the FT Live’s The Banking Revolution

© Hunters Law LLP 2023 | Privacy NoticeLegal & Regulatory | Cookies Policy | Complaints Procedure.

Hunters Law LLP is authorised and regulated by the Solicitors Regulation Authority (number 657218)