Grace Watson: Shake-up of employment rights needed for those working in ‘gig economy’

With the rise in web-based service firms, more and more people are signing up to self-employed contract roles. This trend has been nicknamed the ‘gig economy’.

Grace Watson is a Senior Solicitor, Gillespie Macandrew

UK employment law has long recognised three categories of working relationship: employees, workers and self-employed. Employees enjoy wide ranging employment rights and protections.

Workers are entitled to certain important minimum rights, such as holiday pay, minimum wage and protection from discrimination. And while self-employed people enjoy flexibility, they currently have no access to employment rights.

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Employment practice within the gig economy has recently been subject to scrutiny by the courts as people working within it have sought to secure the same rights as workers. In 2017, drivers of taxi company, Uber, won their case to be recognised as workers. Similarly the Employment Tribunal ruled in the CitySprint UK Ltd case and a more recent case in 2018 involving Hermes, that couriers, despite their contractual documents describing them as self-employed, were also workers.

In June 2018, a landmark Supreme Court ruling concerning the gig economy hit the headlines. An independent contractor, Mr Smith, had worked for Pimlico Plumbers Ltd for six years. Throughout that time, Pimlico Plumbers were under no obligation to offer him work, and he wasn’t obliged to accept it. However, he was expected to work five days per week for 40 hours, wear a uniform, carry an ID card, use a company mobile phone and hire a company van when carrying out work. Mr Smith brought legal action against Pimlico Plumbers in respect of disability discrimination, holiday pay and unauthorised wage deduction – claims not normally available to a self-employed contractor.

Both the Employment Tribunal and Court of Appeal found in Mr Smith’s favour. Pimlico Plumbers appealed to the Supreme Court, and were unsuccessful. The Supreme Court held that despite his purported self-employment contract, Smith was a worker and entitled to these employment rights.

However, not all cases have gone in the favour of gig economy staff. Riders of delivery company, Deliveroo, were ruled in 2017 by the Central Arbitration Committee (CAC) not to have worker status and accordingly not entitled to trade union recognition. This ruling was primarily due to the right of Deliveroo riders to hire and pay a substitute to carry out a delivery on their behalf. The CAC viewed this as being fatal to the element of ‘personal service’ required for employee or worker status.

In recent months this was the subject of a judicial review brought by the Independent Workers Union of Great Britain (IWGB). The IWGB sought to overturn the CAC ruling on the basis that not allowing collective bargaining was incompatible with the European Convention on Human Rights.

The High Court dismissed the judicial review in December 2018, affirming that Deliveroo riders were not ‘employed’ for the purposes of human rights law.

It is interesting to note that while the case before the CAC was ongoing, Deliveroo riders had brought a concurrent claim in the Employment Tribunal for unlawful deductions from wages and holiday pay. Following the CAC’s determination of Deliveroo rider’s self-employed status, the Employment Tribunal claim settled out of court – clearly there are a number of cases that have not hit the headlines that are being settled in this way.

To date, the decisions of the courts have hinged on the facts of each case, there being no simple rules to determine whether a person is a self-employed contractor, worker or employee. For individuals working within the gig economy, this is a confusing situation. In the absence of defined rules, it is likely that self-employed/worker status will continue to be tested in the courts and tribunals, in addition to many potential claims being settled out of court.

The Taylor Review

In 2016 the Prime Minister appointed Matthew Taylor, CEO of the RSA, to report on whether UK employment law was keeping up with modern practices. The resulting Review recommended that a new class of worker should be created, called ‘dependent contractors’, who would continue to benefit from flexible working arrangements, while ensuring their entitlement to minimum statutory protections.

The Government’s response to this promised a shake-up of employment rights for those working in the gig economy. Proposed measures include providing clear and consistent definitions, with increased emphasis on the relationship between an employer and a dependent contractor. For gig economy staff and management alike this may signal important legislative changes to come, bringing clarity to both.

Grace Watson is a senior solicitor, Gillespie Macandrew