At the peak of the recession when many businesses made roles redundant or operated on a shorter working week, the phenomena known as the “gig economy” began to take root alongside the traditional pattern of working. The flexible working that the gig economy offered was at first attractive to many individuals who used this method of working to maximise their income and fill the gaps in their working week created by the unstable labour market. For a period of time this new hidden economy rumbled along with relatively low media coverage. However, over recent months we have seen the emergence of discontent amongst a number of those associated with gig economy businesses. This has subsequently resulted in a flurry of employment law tribunal challenges being presented against gig business such as Addison Lee, CitySprint and Deliveroo. Up until now businesses have been able to sit back and watch the scrutiny of these businesses without much concern as to whether their own business practices would withstand a similar critique.
The latest decision about the status of individuals working within the “gig economy” was given by the Employment Appeal Tribunal (EAT) on Friday 10 November. The EAT ruled in favour of the drivers and stated that they are workers and as such are entitled to basic employment law rights. Uber immediately announced their intention to appeal the decision. Clearly they do not intend to simply accept that this is the end of the road for this high tech “app hailing” private minicab business. Consequently, if your business is reliant on technology to increase the people you involve in bringing your business concept to the marketplace. If, you have created an alliance of individuals who are free to run their business within your business. In short it’s likely that you are running a, “gig economy” business and you will need to take action.
What action will I need to take?
In light, of the unsuccessfully defended EAT hearing against Uber businesses will now need to review the working status of any self-employed people who work in close association with your business. Unlike the previous decisions of the Employment Tribunals, this decision is binding. This means that any case that is presented to tribunal now which appears to be based on similar facts or business model to that of Uber is likely to be unsuccessful.
Businesses operating in the gig economy now have to brace themselves for the employment rights and associated additional costs that these “workers” will now be entitled to. In summary the new rights will be:
- National Minimum Wage;
- Holiday pay;
- Protection against unlawful discrimination;
- The right not to be treated less favourably if they work part-time;
- Protection against unlawful deductions from wages;
- Rest breaks;
- The right not to work more than 48 hours per week;
- Protection against unlawful discrimination;
- Protection from suffering any detriment after reporting any issue relating to wrongdoing in the workplace i.e. “whilstleblowing”;
- The right not to be treated less favourably if they work part-time hours;
- They may also be entitled to sick pay and family friendly rights such as maternity leave.
Twist in circumstances
On 14 November 2017, the Central Arbitration Committee (CAC) declined a collective bargaining recognition application made by the Independent Workers’ Union of Great Britain. The application was rejected on the basis that the Deliveroo riders who the Union had suggested were workers’ were not workers’ but self-employed individuals. Whilst, this decision was not capable of overturning the EAT judgement it did open up once again the whole debate as to whether it is possible for individuals working in a “gig economy” businesses to be truly self-employed.
Unfortunately, that debate may be somewhat stifled now as the Government select committees have recently issued a report which is at odds with the CAC decision. That report named, “A framework for modern employment”, strongly recommends that changes should be made to the law to give self-employed individuals, “worker by default” status and the basic employment rights mentioned above earlier. The report indicates that the automatic worker status will be triggered by a threshold (the details of which are unknown at present) and will place the onus on the business to prove that the individual is self-employed and not a worker.
So it appears that, “by hook or by crook”, individuals presently working as self-employed within the “gig economy” are set to acquire basic employment rights. But what the financial consequences may be to SME businesses is yet to be revealed.