Gig-economy working: where are we up to now?

What matters

What matters next

As digital platforms continue to dominate, the gig economy provides jobs that enable flexible working. This article seeks to explore the recent state of play regarding gig-economy working in the UK, and how employers can comply with their obligations.

What is the gig-economy?

The gig-economy reflects the labour market in which typically short-term jobs are carried out over digital platforms by individuals who can fit such work around their other commitments. Customers can order a taxi ride, takeaway or food delivery to name but a few via an app, which individuals with their own method of transportation can utilise to perform such work. Individuals working in this way can therefore be matched with customers who require the service, and the digital platform facilitates this process; people can use such apps in a piecemeal fashion to generate supplementary income, or they can work on this basis for a longer period of time if preferable. 

Employment status: how has the issue arisen?

Digital platforms have grown and adapted over time with the aim of providing flexible employment for those performing such work, and the need for apps to match customer demand. Key cases have journeyed through to the Supreme Court and have discussed the employment status of gig-economy participants, notably whether they are workers or self-employed contractors. There is an inevitable balancing act between promoting flexibility and protecting the rights of working individuals, which has proven difficult to resolve in this sector. 

Who is an employee and who is a worker?

Employee status denotes those who work under a contract of employment, which can be a verbal agreement or in writing; they receive legal rights such as the right to statutory pay and leave, protection against unfair dismissal, minimum notice periods upon termination, time off for emergencies and the right to request flexible working, amongst others. Those in self-employment operate as independent contractors, and therefore do not receive the legal protection afforded to employees. Not only is a determination of employment status important in terms of the legal protection afforded to those found to be employees, but it can also have an impact in adjoining areas; collective bargaining rights under Article 11 of the European Convention of Human Rights have been found to not apply in cases of self-employment, meaning that such self-employed individuals cannot participate in trade union action or have their chosen union represent them when seeking to achieve the legal rights available to employees.

The slightly greyer area of worker status exists in between that of employment and self-employed, to protect those individuals that may depend on their employer but who are not afforded employee status. The Employment Rights Act 1996 indicates that workers are individuals that work under a contract of employment or any other contract within which personal performance is a requirement. Whether an individual has worker status is very much determined on a case-by-case basis, making it difficult for employers to correctly identify the status of individuals within their workforce.

One of the key factors that can help employers to correctly identify status is whether personal service is required. Employees must provide their services personally and cannot send a substitute in their place; it has been found that this applies to workers too. Another helpful factor is whether employers have an obligation to provide work and the working individual has an obligation to perform it. Where such an obligation exists, there is likely to be employment status and probably worker status too. For worker status, work just needs to be provided when it is available, and does not need to be regular, nor consistent.

Employment tribunals have highlighted other key factors that point towards a finding of worker and/or employee status, such as the level of control the employer has over the individual, and the reality of working conditions experienced, as well as the contractual terms. Most recently, a tribunal has ruled that creative writing professors at the University of Oxford who provided casualised work via fixed-term ‘personal services’ contracts should have had employee status due to the nature of the work they undertake. Such precarity in working has also been brought by claimants in current claims relating to fitter work for kitchen, bathroom and fitted furniture retailers, and postal delivery services. Employers operating in this area must be aware that there is likely to be continued litigation on this topic, both in the UK and abroad, and so this area is likely to evolve over the following months and years, as it has been since 2016.

Lessons from abroad?

While the law may remain unclear in some respects in the UK, there is the need to further establish parity to the way in which those working for such digital platforms are categorised abroad. The ‘Riders’ Law’ was introduced in Spain in 2021 which introduces a rebuttable presumption of employment for those who perform work in this way. In March 2023, Switzerland also decided that drivers working in the gig-economy are employees. While this led to financial penalties and the eventual withdrawal of operations in Spain for some businesses, the European Commission’s proposal to extend a similar law throughout the European Union has notably failed to proceed as of yet, as key countries have not extended their support. 

In the US, while employment status is largely restricted to the two categories of independent contractors or employees, such tests also change between different administrations and between different states. Notably, the state of California has started to introduce a third category via Assembly Bill 5 for those who provide services outside of their usual course of business, but app-based companies successfully countered this with Proposition 22, a state law ruling which has indicated that gig-economy participants do not have be considered employees. Employers will inevitably need to keep an eye on events occurring abroad as well as at home to ensure they remain cognisant of legal developments in this area which are likely to affect them.

Guidance for employers going forwards

  • Be aware of how developments such as holiday pay, working time and the National Minimum Wage can impact those in this sector.
  • Note developments such as the new Workers (Predictable Terms and Conditions) Act 2023 which is expected to come into force in September 2024, which has sought to resolve issues of one-sided flexibility where workers were expected to be available at short notice without a guarantee of work. For more details, see our recent article.
  • Remain aware that employment litigation is both on the rise generally and remains prolific in this area.
  • Maintain awareness of legislative updates to ensure ongoing compliance in this ever-changing legal landscape. 

Disclaimer

This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. © Shoosmiths LLP 2024.

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