The Big Gig Rejig – what employers should know about the gig economy

21st March 2019

John GriffithsThis article originally appeared on Legal Futures.

The ‘gig economy’ is never far from the news. DAS Law Solicitor John Griffiths explains where the term comes from, what it means, and how businesses can help themselves today when it comes to clearly defining the status of their people.

For many, the days of CV writing and interviews are gone. Now it is a case of a digital visit to the App Store, with the commute replaced by firing up the chosen app over breakfast. And there are no concerns about making a good impression with a new boss, as algorithms don’t judge your small talk or choice of footwear.

Welcome to the gig economy.

Defined by the Department for Business, Energy and Industrial Strategy as “the exchange of labour for money between individuals or companies via digital platforms that actively facilitate matching between providers and customers, on a short-term and payment by task basis” the gig economy is associated with flexibility, convenience, and opportunity – and now employment disputes.

This emerging workforce gained huge momentum through digitisation and in 2018 it was estimated by Wired Magazine that around 1.1 million people in the UK are considered gig economy workers, and this number is predicted to keep rising. And the question of whether this is a resource that is being intelligently utilised or exploited depends of course on your perspective.

Central to this type of work is the already complicated area of employment status. Employee? Worker? Self-employed? Self-employed plus?

No, I didn’t make that last one up, that’s now a thing – more on that below. Whichever of these labels is attached may come with a host of employment rights, or lack thereof, and various other considerations from a legal perspective.

The default position – and this was certainly the perception of employers – was that the gig economy was a group of self-employed people picking up ad hoc work at their discretion, however this came to be disputed as this type of work grew in popularity. But the run of legal challenges on employment status in recent years have highlighted the significant risk that individuals hired as ‘self-employed’, may be actually be considered ‘workers’.

The outcome of cases in this area are highly fact-sensitive, making them unpredictable. That being said, recent trends do show that individuals engaged as self employed contractors in the gig economy are increasingly finding themselves relabelled as workers, gaining rights such as holiday pay, sick pay and minimum wage.

Case law background

Since 2012 there has been a steady stream of cases on this subject making their way through our legal system.

OK, more accurately for a long time it was the same case heard at ascending levels, with the Supreme Court eventually in June 2018 upholding a decision that an engineer at Pimlico Plumbers should be deemed a worker. And in other high profile decisions in recent years, cases involving a CitySprint cycle courier, an Addison Lee driver, and Uber drivers were all decided similarly – these were ‘workers’.

Was the Gig up? Not entirely. Contrary to this trend, in November 2017, the Central Arbitration Committee (CAC) decided that Deliveroo cyclists were ‘self-employed’. This has since taken been taken to the High Court, where the decision was upheld.

The crux of this decision lay with contractual substitution provisions. The courts are aware of the fact that some contractual substitution provisions are shams designed to avoid granting entitlements. In this case however, evidence was shown that riders could (and did) give out their password details enabling substitutes to provide the service on their behalf.

How have employers reacted?

One significant player in this space has adopted a creative approach to providing some clarity by creating a new class of arrangement, dubbed the ‘self-employed plus’. Courier company Hermes devised the new classification following a deal with the GMB Union, who won a case against Hermes in the Employment Tribunal in June 2018.

The outcome was that the ‘lifestyle couriers’ (couriers who deliver on a flexible schedule using their own vehicles) were to be deemed ‘workers’.

Under this new status, an individual can opt in and gain the benefit of paid holiday and fixed pay rates, and full GMB Union representation. In exchange for this security, new couriers must follow Hermes’ pre-prescribed delivery routes.

But individuals also have option to opt out, and to continue to earn a premium rate for certain jobs but forgo basic workers’ rights, such as the national minimum wage, holiday and sick pay.

What your business could do

There are certainly steps employers can take to help indicate that the status of a person carrying out work for them is that of ‘self-employed’. I’d suggest that these include:

  • Make it clear there is no obligation to perform the work personally. If possible, include an unfettered right of substitution.
  • Avoid restrictions on the individual’s ability to provide services i.e. when, how and where they provide services.
  • Avoid fixed hours of work and fixed weekly or monthly retainer fees.
  • Avoid the provision of holiday pay, sick pay or other employment benefits.
  • Avoid steps that integrate the individual within the business.
  • Avoid the use of branded uniforms and equipment.
  • Allow and encourage the individual to carry out work for others.
  • Ensure individuals bear their own expenses and equipment.
  • Evidencing the parties’ intention to create a contract for the provision of services and not a contract of employment from the outset.

Keep these factors in mind when assessing your workforce/relationship with your client or employer and it will put you in good stead when making an educated assessment of the scenario.

Disclaimer: This information is for general guidance regarding rights and responsibilities and is not formal legal advice as no lawyer-client relationship has been created.

How to navigate employment rights in the gig economy

If you are unsure about your employment status, the rights and benefits that come with it, you need advice from professionals who understand the law.

July 2018 Learn more
How to avoid workplace discrimination in your business

Businesses must do all they can to prevent discrimination in the workplace and being up-to-date with equality law is essential.

April 2018 Learn more
9 questions and answers about the gig economy

We talked about the basics of the gig economy with Allison Lewis, Head of Employment at DAS Law.

February 2018 Learn more

Read more from the DAS Law blog

Employment disputes Employee, self-employed or worker? – The Bitesized Edition

Employment status can be complex if an organisation does not define the relationship with an individual clearly and reflective of the actual relationship in practice.

April 2024
Employment disputes Workplace stress: your responsibilities as an employer

Commenting on Stress Awareness Week, Sarah Garner, Solicitor at DAS Law, takes a look at what the law says employers needs to do about stress.

April 2024
Employment disputes International Stress Awareness Month: your workplace rights

To mark International Stress Awareness Month, Sarah Garner takes a look at what the law says your employer needs to do about workplace stress.

April 2024
Employment disputes Don’t get in trouble with the law on April Fool’s Day

When does the line between hilarious and harsh get crossed and can a prank turn into legal proceedings?

March 2024
Employment disputes Top 10 Settlement Agreement tips for employers

The purpose of a Settlement Agreement is to bring an employment relationship to an end by mutual agreement. Here are our top 10 tips for moving people on with settlement agreements.

March 2024
Employment disputes Do employees get extra pay on a leap year day?

Every four years, many workers find themselves cramming an extra day of work into an already packed year. But are workers in the UK entitled to extra pay for this extra work?

February 2024
Employment disputes How Maternity, Adoption and Shared Parental Leave regulations are changing this year

In this Bitesized Edition, we look at the new Maternity Leave, Adoption Leave and Shared Parental Leave (Amendment) Regulations, set to come into force on 6 April 2024.

February 2024
Employment disputes 9 things employers need to know about apprenticeships

With National Apprenticeship Week here, we explain what employers need to consider regarding apprenticeship schemes and their legal obligations.

February 2024
Employment disputes How flexible working regulations are changing this year

Amendments to the current flexible working legislation will come into force this year. Any flexible working applications made on or after 6 April 2024 must be dealt with in accordance with the regulations.

January 2024
Employment disputes Holiday Pay Guidance from the Government – The Bitesized Edition

The Government has issued guidance on calculating holiday pay to simplify holiday entitlement for irregular hours and part-year workers.

January 2024
General advice , Employment disputes Be on your best behaviour at your work Christmas party

Charlotte Ellis. Legal Adviser at DAS Law, looks at the rules surrounding the office Christmas party.

December 2023
Employment disputes Don’t get a red card while watching the World Cup at work

If you are planning on watching World Cup matches at work there are a number of important things to consider.

August 2023
Employment disputes How employers can prevent harassment or bullying in the workplace

Employers can be liable for employees who have subjected other employees to harassment in the workplace if they have not taken reasonable steps to prevent harassment.

July 2023