RSA Chief Executive Matthew Taylor is leading an inquiryinto how employment practices can keep pace with modern business. He will consider the “implications of new forms of work, driven by digital platforms, for employee rights and responsibilities, employer freedoms and obligations, and our existing regulatory framework surrounding employment”. The TUC suggests lost tax revenues from the growth of this “insecure work” could be £4 billion annually, equal to a quarter of England’s care budget.
The “gig economy” describes a labour market where businesses use short-term contracts to maintain a workforce performing short term jobs, or “gigs”. A person is engaged on the basis of individual assignments (such as each taxi run or courier delivery) and paid according to each job. Recent cases before courts and employment tribunals certainly expose a system trying to unravel working relationships some hail as innovation, but others criticise as tax evasion.
We’ve seen the headlines involving taxi drivers, couriers and plumbers. In each case, the courts have rejected arguments that individuals used to deliver a service for customers are, contrary to what their contracts say, self-employed.
Employment status determines the application of legal rights and responsibilities. Uber, Deliveroo, City Sprint and Pimlico Plumbers have all faced claims from individuals retained by them found to be workers, not self-employed contractors. This means they have the right to holiday pay, sick pay and the National Minimum Wage. A truly self-employed contractor has no employment rights but is protected by laws designed to ensure health and safety at work and prevent unlawful discrimination.
A worker does provide a more personal service in a legal relationship which carries greater rights and responsibilities. They are obliged to work contracted hours as required, but have the protection of the Working Time Regulations so cannot be forced to work more than the statutory weekly maximum 48 hours. They are entitled to breaks and paid holidays. They also have the protection of the Equality Act, making discrimination unlawful if it arises from a protected characteristic. An employee has all of the above rights but enjoys full employment protection. This adds the right not to be unfairly dismissed after two years’ service and to be compensated if made redundant.
In both the Uber and City Sprint cases, individuals were found to lack any real autonomy over the work they did. Those companies allocated jobs, tracking them through apps, GPS and radios. In City Sprint and Pimlico, individuals wore uniforms clearly identifying them with that business. Turning down a particular “gig” proved highly problematic, if not impossible, in these cases. In some instances, individuals could be also be subjected to performance management and basic discipline.
In the Uber case, the contracts with drivers were unequivocally worded, seeking to put beyond doubt that they were self-employed. But the tribunal saw the reality beneath. So never assume a clever lawyer can draft you out of trouble – be realistic about obligations your working relationships will create.
Chris Phillips is a Partner at Loch Employment Law