The 'Gig Economy' and Employment Law
The gig economy has evolved alongside modern day working, the implications of which have raised several questions under employment law in the UK.
- What is the ‘gig economy’?
- What does the law say about workers and employees?
- Why is working status important?
- Uber -v- Aslam (and others)
- What does this mean going forward?
1. What is the ‘gig economy’?
If you’ve ever taken an Uber, ordered from Deliveroo, or even visited certain bars or restaurants recently, then you have been served by the ‘gig economy’. As we have increasingly digitised, so too has the world of work, leading to a model by which fewer and fewer people actually need to be traditional employees in order to make a living. This enables companies to operate with less overhead and allows workers the option to devote more time to studying, providing childcare, or even working at other jobs.
While this certainly does bring its benefits for those involved, many of the workers themselves have been seen to suffer from disadvantages under employment law. The nature of the ‘gig economy’ has cast doubt on where exactly those working in it stand from a legal perspective. This is important for a number of reasons, not least that it determines the applicability of a number of rights and remedies that are designed to protect people from being taken advantage of by those they work for.
2. What does the law say about workers and employees?
Outside of gig working, people who are employees will know through the fact that they have an employment contract delineating their relationship with the business that they are working for. However, an individual who is paid to do a job for a business will not always have an employment contract and is not always necessarily classified as an employee under employment law. Broadly speaking, employees have been distinguished through analysing whether their working situation is in line with the following:
- Do they carry out the work themselves? The concept of personal service means that the individual, in order to be an employee, must do the job himself/herself and not send anybody else to work in his/her place.
- Does the employer guarantee work? Mutuality of obligation means that the business must provide employees with work that they are then obliged to carry out under the terms of the employer for an agreed upon wage.
- Does the employer have control? The employer needs to have a certain level of command over how the work is done for the worker to be considered an employee.
Not all workers, however, will be classed as employees. The general conditions for defining workers are somewhat broader:
- They will have a contract - not necessarily written – to work or provide services for a reward.
- This reward will be money or some other benefit, such as the assurance of future work.
- There is a limited right to subcontract the work.
- Workers are expected to come to work, they cannot just come when they feel like it.
- The employer has to provide them with work for the duration of the arrangement.
- The workers are not carrying out the work as their own limited company – this would in fact make them self-employed and the ‘employer’ would be a client.
The difficulty that arises with the gig economy is that it often leads to situations that straddle the boundaries of these definitions, with the last point above being especially similar to the argument upon which companies who see an advantage in not having ‘their own’ workers have relied.
The more casual nature of the model means that satisfying these tests can prove somewhat more difficult on the face of things. For example, how can a person really be guaranteed to work in a system where individuals and businesses can opt in or out as and when they like? How much work-related freedom actually means that someone is self-employed?
Over the past few years, the field of employment law has had the task of adapting to ensure that these grey areas are properly addressed. A raft of cases have fallen at the feet of the courts, stemming from a variety of different business practices that have largely relied on workers who are claimed by certain companies to be self-employed.
For instance, even if a person’s contract indicates that he/she is self-employed, the practical nature of the arrangement, with regard to the above tests, may still mean that under employment law, he/she is in fact acting as a worker.
3. Why is working status important?
Determining the status of a people as workers determines their rights, as well as how they pay their taxes. Under employment law in the UK, all workers hold certain statutory rights. These include
- The National Minimum Wage
- Holiday pay, as calculated
- Certain protections – including from unlawful discrimination
- The right to receive payslips
- A maximum 48 hour work week (if they don’t choose to opt out)
- Written terms of ‘employment particulars’ explaining these rights along with their roles
However, general workers still do not benefit from several key statutory rights that do apply to employees. These include:
- Paid parental, maternity, paternity, or adoption leave, as well as paid time off for bereavements.
- Redundancy pay after two years of continuous service. This means that if the employer has to let an employee go, the employee will receive a payment so long as he/she has been employed for two years without interruption.
- The right to bring an unfair dismissal claim after two years of continuous service. In the UK, employment law offers protections to employees of more than two years who feel that they have lost their job for an unfair reason, such as asking for flexible working, joining a trade union, or applying for maternity leave.
- The entitlement to a notice period. Depending on how long an employee has been employed, the employer must give the employee a minimum time period before dismissing him/her or making the employee redundant. Some companies will simply give payment in lieu of notice (also known as PILON) for the time that an employee would have worked during the notice period.
- After 26 weeks of continuous service, employees may request flexible working arrangements.
Several companies argue that they simply act as intermediaries for individuals seeking gig work, and as such do not need to consider these factors. In the world of platforms that we see today, should individuals who use them for work be classified as workers?
It is clear that treating those in the gig economy as self-employed could mean they miss out on rights and protections that they may actually be entitled to as workers under employment law.
Despite appearing to be self-employed, if an individual is acting as an employee in all but name, even if the worker’s arrangement has come about through another platform, there is a strong argument for bringing the worker under protections offered by statute.
4. Uber -v- Aslam (and others)
One of the most famous examples of a business based around gig working is Uber. Drivers log in with the app and are then able to drive customers for a fee, a portion of which goes to the company. Uber claimed that its drivers were self-employed ‘independent contractors’, as they can work when they like and are actually providing services to the passengers, not to the company. Uber had also structured its contracts with the drivers to reflect this stance.
This would mean that Uber would not be entitled to the rights and protections given to workers under employment law - notably the National Minimum Wage, paid holiday and certain protections, such as from discrimination or the unfair deduction of wages.
In 2016, the Employment Tribunal disagreed with Uber’s position, ruling that Uber drivers were workers under employment law and as such were entitled to the rights and protections that came with this status.
On appeal in 2018 this decision was upheld, both by the Employment Appeals Tribunal and the Court of Appeal. It was assessed that for the purpose of calculating minimum wage, the drivers are not simply working when they have a passenger in the car, but in fact any time that they are using the Uber app as drivers waiting for passengers. This concept is similar to how a doctor may be on call and is therefore still working even when not actually being in the presence of a patient.
Uber’s appeals progressed all the way up to the Supreme Court, who heard the final arguments from both sides. The company’s position here remained the same – Uber is simply a booking agent facilitating agreements made between self-employed drivers and their passengers, who were individual parties to a separate contract for the services of the drivers.
In theory, there was nothing to prevent Uber drivers from using several private hire platforms at once, so how can it be said which company the drivers were working for at any given time? It was noted that the particular drivers involved here were only using one platform at a time.
Technically, Uber saw itself as supplying a service to the drivers for a fee, as opposed to paying them as workers, and this was reflected in its contracts with the drivers. The Supreme Court rejected this in 2021, ruling that despite these contracts, the practical nature of the working relationship here meant that Uber itself was providing services to the passengers and using the drivers as workers to this end.
Several factors were considered in reaching this judgement, including the following:
- Uber controls the earnings of the drivers. Fares are fixed for each trip, as are Uber’s cut and any deductions or alterations that need to be made.
- Uber sets the terms and conditions by which its drivers must abide.
- Drivers are not free to accept or reject jobs without being liable for a penalty, such as a temporary suspension. There are also restrictions on how much information is given to the driver before they accept a job, for example the destination.
- There is also a large degree of control over how the drivers work. Uber sets the route, monitors performance through a star-rating system and deals with all matters relating to client complaints.
Consequently, Uber drivers are now deemed to be workers under UK employment law – and so entitled to the relevant rights and protections that come with this – for the duration of the time that they have the Uber app active to accept trips.
The Supreme Court also made references to the level of control that Uber exercises over its drivers. Whether these drivers were also employees was not under discussion, however it is arguable that the control element of an employment relationship may well have been said to exist here. What is clear, however, is that the drivers were dependent on Uber for work.
5. What does this mean going forward?
Clearly, the Supreme Court’s decision in Uber has set a precedent for how gig economy working will be viewed from now on. Aside from the potential pay-outs due to the cohort of drivers who brought the initial claim (backdated minimum wage and missed holiday pay), Uber itself has had to make changes to its agreements with drivers and must now treat them as workers.
In terms of the wider gig economy, the ramifications of the Uber decision are a step in the right direction for the more than five million people who rely on it for income. Although it has not reclassified them all as workers overnight, the questions that have been raised, coupled with the answers given by the Supreme Court, suggest that there is a strong desire to guarantee their rights and protections as far as possible.
The government had already begun to address the issues of gig working when the Taylor Review of modern working practices was commissioned in 2017. Here it was recommended that they introduce a new employment law status for ‘dependent contractors’. This would strengthen the positions of people who work via such platforms as Uber or Deliveroo, giving them more rights than self-employed independent contractors (as well as sick pay), but still less than traditional employees. Such a change would still offer a degree of flexibility for workers and companies who require it.
For many who feel that the current framework has enabled big companies to take advantage of workers, it is hoped that the Supreme Court has given legislators the proverbial kick up the backside when it comes to formally clarifying who is working for who in the eyes of the law.
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