Belfast Telegraph

Why the 'gig economy' looks likely to remain in spotlight next year

Rachel Penny from law firm Carson McDowell on why some of the UK's biggest employers were in the headlines for all the wrong reasons during 2016

By Rachel Penny

It would not be a stretch to suggest that 2016 has the potential to go down as employment law's 'annus horribilis'. Barely a week has passed without employers grabbing the headlines for the wrong reasons - big name brands such as Sports Direct, Amazon, Uber and Hermes, to name just a few.

What most of these employment stories have in common is a perception that some companies are deliberately exploiting forms of 'self-employment' - mostly by preventing casual or agency workers who work for them from being categorised as 'employees' and therefore benefiting from all the protections that employment law can often offer.

You see, in the world of employment law, not all are created equally. At one end of the spectrum we have employees, who have the most rights. At the other end we have the self-employed who have the least rights, and in the middle we have a strange hybrid of the 'worker' who has some, but quite limited rights.

For example, only employees, have the right not to be unfairly dismissed, to redundancy payments, to maternity pay, to sick pay and so on. Workers (and employees) have the right to national minimum wage, and to paid annual leave.

But what we have seen in the last few years is an increasing trend for certain companies to try to blur the lines between who is self-employed, who is a worker and who is an employee.

In the past year, the matter has reached its peak, with an explosion of cases making national headlines. It's probably not a coincidence that this has happened in a year the National Living Wage was introduced for those aged 25 and over.

The Uber story made a lot of headlines, so let's take it as an example.

Uber claims that none of its drivers are workers and that it is not a taxi company but a technology platform and an agent that puts passengers in touch with local drivers. It works via an app, and when drivers log in to their 'patch' that indicates they are ready and able to accept fares.

Uber put in place highly complex contractual relationships between it and the drivers. Although the driver provided the vehicle, paid for insurance, licensing and running costs and didn't have to wear a uniform, Uber set the route, the fare and asked passengers for ratings which, if consistently poor, could block the driver from the app and effectively bar him or her from working.

A group of Uber drivers brought claims in an employment tribunal in London, arguing that they were not self-employed, but workers, and therefore entitled to the National Minimum Wage and to paid holiday. The tribunal agreed with the drivers. One of the key factors was Uber's ability to block the driver from the app if, for instance, the driver did not accept sufficient fares, or if his or her ratings were poor. The tribunal said that it was ridiculous to consider Uber in London as a 'mosaic' of 30,000 small businesses (ie, all the drivers) linked by a common platform. The key feature of a truly self-employed business, the ability to bargain and negotiate the terms on which you will provide your services, was completely absent.

Uber is appealing the decision, but in the wake of the initial successful tribunal verdict, I would expect to see many more similar cases. Cyclists for Deliveroo - the fast food delivery business - have already brought a similar claim and if you consider how many tech-based start-up businesses are described as "the Uber of something" it suggests that many more companies operating similar models are open to claims.

Win, lose or draw, the issue is now high on Downing Street's agenda, with a government review of the "Future of Work" and the rise of the so-called gig economy.

The gig economy is often defined as being made up of people who have small jobs instead of - or in addition to - full-time jobs and who instead of a salary get paid for the gigs they do. With global consultants McKinsey recently estimating that five million people are employed as independent workers like this in the UK and that the independent workforce makes up to 30% of working age people in the US and Europe, employers can't afford to get it wrong.

The government will definitely be interested in the issue, because it makes good tax sense. If all of Uber's drivers were, for example, entitled to National Minimum Wage, HMRC would stand to gain greater tax revenues.

So we should expect more of the same in 2017. Taxi drivers and couriers have been first out of the blocks, but others may follow.

*Rachel Penny is an employment law partner at law firm Carson McDowell

Belfast Telegraph