What a performance – “The gig economy”

Two years ago no one would know what you were talking about if you mentioned the gig economy. However, over recent months those engaged in this area have been thrust into the limelight.

The gig economy refers to independent contractors working on short term engagements. These engagements (or “gigs”) are normally entered into via technology platforms such as smart phones or tablets. For example, a customer requiring a service uses an app, and the company which runs the app outsources the work to the independent contractor nearest to the customer, who then provides the service. The number of self-employed contractors in the UK has risen over the last 10 years from 3.8 million in 2008 to approximately 5 million in 2016.

As this sector of work has expanded and indeed, become increasingly competitive, there has been a squeeze on the contractors by the companies engaging their services. To some extent, this has led to a kick back by the contractors over their employment status; independent contractors have very few rights when it comes to employment law. They are not entitled to paid holidays, sick pay, maternity or paternity pay, or even basic statutory employment rights.

A number of self-employed contractors have challenged their status as they felt they were becoming more and more embedded within the large organisations they were working for and were no longer genuinely self-employed. They should therefore be entitled to certain rights and benefits that employees or workers would benefit from.

The challenges have resulted in a string of high profile cases:

• Aslam & Farrar v Uber – This was the first high profile ‘gig economy’ case. A number of drivers brought a claim against Uber claiming they were workers and should be entitled to the same workplace rights as said workers. The arguments advanced by Uber were based on the fact that they were a technology company and act as an agent between drivers and customers through their app. The contract is therefore between the passenger and driver directly.

The Tribunal did not accept this position and found that Mr Aslam & Mr Farrar were workers for the purposes of employment legislation. Uber appealed this decision to the Employment Appeal Tribunal (EAT) who upheld the Tribunal’s decision; Uber drivers were ‘workers’ and were working from the moment they arrived in their territory with the app switched on, to the moment they left their territory (except when they were on a job) or switched their app off. This was a double blow for Uber who had argued that if their drivers were workers, then they only ‘worked’ whilst on a job.

Workers 1 – 0 Gig Economy Giants

• Independent Workers' Union of Great Britain (IWGB) v RooFoods Limited t/a Deliveroo – Another household name took up the mantle of this developing area of law when the IWGB asked the Central Arbitration Committee to force Deliveroo to recognise it as a trade union for its delivery riders (a right it would only have if the riders were workers). Deliveroo argued that its riders were not workers, as there was simply no obligation on riders to provide services personally. They provided evidence that their riders could give their Deliveroo account to a friend and let them carry out their deliveries (undermining a central element of worker status – ‘personal service’).

“Madness” said the IWGB. “that business model would make no sense given the intensive ‘on-boarding’ process’ with which Deliveroo make riders undertake. This provision is a sham to avoid riders having worker status”.

“Madness maybe” decided the Committee “but we are not here to decide whether Deliveroo need to fire their strategy department. All that matters is that riders can have someone else carry out their deliveries and that this does occur in practice”. The Committee therefore decided that Deliveroo riders were not workers.

Workers 1 – 1 Gig Economy Giants.

• Pimlico Plumbers Limited v Smith – A landmark decision made by the Supreme Court only last week. Mr Smith, a plumber who had worked solely for Pimlico Plumbers for six years, brought a claim against Pimlico claiming he was a worker despite being VAT-registered and paying self-employed tax. Pimlico exercised tight administrative control over Mr Smith; he personally carried out the work required and was only able to substitute his work to another Pimlico colleague. Pimlico also required Mr Smith to wear a company branded uniform, lease one of its vans and to work a minimum number of hours per week.

The Supreme Court rejected Pimlico’s appeal against a number of court rulings which held that Mr Smith could claim “worker” status even though he was described in his contract of employment as “self-employed”. The Supreme Court followed already established legal tests in making their decision - a main factor was that Mr Smith did not have an unfettered right to provide a substitute and was obliged to provide his services. In addition, the language contained in the contract was consistent with an employment contract rather than self-employment.

According to Pimlico’s chief executive, this decision will lead to a ‘tsunami of claims’ but whether or not it does indeed do so, is likely be revealed in the upcoming months.

Workers 2 – 1 Gig Economy Giants.

But why has this area of law attracted three high profile cases in such a short space of time? Part of the reason is that the definitions of a self-employed contractor, worker and employee are not clear cut and come down to various legal tests looking at an array of factors. These factors include:

• Personal service - whether the worker has to perform services personally, or whether they can give their phone and their bike to their mate and send them on their way to deliver goods/carry out a service.
• Business undertaking or profession – is the ‘employer’ (for want of a better word) a customer or client of the ‘worker’. If it is, then there will not be a worker relationship. You will be pleased to know that when you instruct a lawyer to write your Will or a plumber to fix your taps, you do not have to put them on the payroll.
• Mutuality of obligation – does the ‘employer’ have to give work, and where it does give work, does the ‘worker’ have to accept it? This will be a matter of fact and degree, and will ultimately determine whether the individual is a worker, self-employed or even a fully-blown employee. If, as in Uber, drivers are expected to accept a certain proportion of incoming calls, this is likely to weigh in the favour of the individual being a worker.

What next?

The Government has now launched a number of reviews, including the Taylor Review, the outcome of which was published in July 2017. The Taylor Review suggested (amongst other things) that a fourth employment status, the ‘Dependent Contractor’, be introduced to pick up the slack between workers and self-employed people. The aim of this new status was to allow individuals to retain flexibility whilst ensuring they’re not taken advantage of. Whilst this is a noble aim, we are yet to hear details on how this would be implemented. Given the complete lack of clarity on where the exact boundary between worker and self-employed person lies, it is possible that introducing a new status would do nothing more than introduce two new boundaries to argue over.

In the meantime, we will await to see whether there are any aftershocks following the Pimlico Plumbers Limited v Smith decision. Besides that, there is nothing more we can do but watch this space.

If you have any questions on anything covered in this article, please do get in touch with our Employment Team on 01603 610911.

Note: the content of this article is for general information only and does not constitute legal advice. Specific legal advice should be taken in any specific circumstance.