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05 Mar 2019 News

Delivering employment change in the gig economy

With the rise in web-based service firms like Uber and Deliveroo, there are more and more people signing up to self-employed contract roles.  This trend has been nicknamed the ‘gig economy’.  There are considerations within this for both employers and employees.

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 any of these employment rights.  

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.  Some independent contractors have successfully challenged their employment status because of the relationship they hold with their employer.

In 2017 the self-employed drivers of taxi company, Uber, won their case to be recognised as workers. Similarly the Employment Tribunal ruled in the CitySprint UK Ltd case that cycle couriers, despite their contractual documents describing them as self-employed, were also workers.   Individuals engaged as independent contractors by the courier company Hermes followed suit in 2018 and successfully claimed to the Employment Tribunal who confirmed their worker status.

Pimlico Plumbers

In June 2018, the gig economy hit the headlines once again with the Supreme Court’s landmark ruling in the Pimlico Plumbers Ltd case. In that case an independent contractor Mr Smith, had worked for Pimlico Plumbers 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, Mr Smith was expected to work five days per week for 40 hours, wear a company uniform, carry a company 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 which ordinarily would not be 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 Smith was a worker and accordingly was entitled to holiday pay, protection from unlawful deductions from wages and protection from discrimination.  Despite his purported self-employment contract, Smith was entitled to employment rights as a worker.

Deliveroo

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 genuine 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 decision 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.  While the precise settlement terms are not known, the settlement was publicised at the time as having included a monetary pay out to the Deliveroo riders.  Clearly there are a number of cases that have not hit the headlines that are being settled out of court.

To date, the decisions of the courts have hinged on the facts of each case, there being no simple rules by which to determine whether a person is engaged as a self-employed contractor, worker or employee.  For individuals working within the gig economy, this is a confusing situation.  In the absence of set or 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

While these cases were ongoing, 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 Taylor Review of 2017 recommended that a new class of worker should be created, called ‘dependent contractors’.  The intention was that ‘dependent contractors’ would be able to continue to benefit from flexible working arrangements while ensuring their entitlement to minimum statutory protections.

The Government’s response to the Taylor report promised a shake-up of employment rights for those working in the gig economy. Proposed measures include providing definitions that are clearer and more consistent, while putting 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.

Clearly the gig economy is here to stay and the potential for more clarity around employment contracts and rights will improve life for those both employing people and those securing work within it.  However with the legislative and legal framework changing, knowing and understanding your rights, whether as an employer or individual, is essential.

 

Grace Watson, Senior Solicitor - Dispute Resolution

Gillespie Macandrew

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