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Has 2018 made the ‘gig economy’ any clearer?

07 December 2018 #Employment


The Department for Business, Energy and Industrial Strategy (BEIS) posits the following definition of the ‘gig economy’: “one that involves 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 payment by task basis”. We can argue about the appropriate use of ‘digital platforms’ as at first it may appear to be too restrictive a term, but it gives a good indication of the 21st-Century-nature of this type of ‘economy’ and the resulting creation of new employer-employee relationships.

For many employers the ‘gig economy’ has allowed them to ride a wave of financial savings created by the rejection of a traditional, 9 to 5, working schedule. Individuals have been quick to accept the label of ‘self-employed’, ‘freelancer’ or ‘independent contractor’ (and the lack of protection that comes with them) as it was offset by the ‘luxury’ of choosing when to work or whether to accept the work you are offered or to reject it. The informal and highly flexible working arrangements means employers see it as permissible not to categorize their workforce with 'employee' or 'worker' status.

However, challenges have come from those who have realised that the rights afforded to individuals without such labels are minimal. If upgraded to 'worker' the individual would be entitled to employment rights such as:

  • National Minimum Wage
  • Paid Holiday
  • Rest periods and limits on working time
  • The right to seek compulsory trade union recognition
  • The right not to suffer detriment

The ‘Gig Economy’ has undoubtedly been one of the top topics of 2018. The common law tests for whether an individual has ‘worker’ status (a requirement to perform the job personally, and demonstration of the employer’s control over the employee) have been integral to the Tribunal decisions. Below we have summarised the importance of each test in decisions made this year:

Pimlico Plumbers v Smith

This case went all the way to the Supreme Court where the original Employment Tribunal decision was upheld. Pimlico Plumbers used its workforce as ‘contractors’, who administered their own tax returns, in fact the Claimant only considered himself a ‘worker’ after he was terminated. Personal Service was particularly prevalent here and should come as a warning to employers relying on substitution clauses. As the ‘contractors’ were in fact allowed to swap assignments the issue was whether the Claimant had to perform the task personally. However, due to the restrictive obligations the ‘contractors’ were subjected to, the right to send a substitute was overly limited.  

Leyland & Others v Hermes

A number of Hermes couriers, supported by the trade union GMB, succeeded in gaining workers status in June, they fought for entitlement to holiday pay and the National Minimum Wage. A key element of the decision here was the level of control Hermes retained over its couriers. Whilst they, like Pimlico Plumbers, did not have the unfettered right to send substitutes, Hermes could veto the couriers’ choice of cover. Furthermore, Hermes’ changed rounds without the courier’s agreement and their rate of pay was changed unilaterally, by Hermes, rather than being negotiated.

Addison Lee v Lange and Ors

Addison Lee like Uber have gone to great lengths to ensure that any form of contract between their drivers was akin to that of a self-employed individual. In particular, Addison Lee likened the arrangement to a ‘zero-hour contract’ expressly referencing the lack of obligation on the individual to accept the work offered to them. However, the Employment Tribunal, whose decision was agreed with by the EAT last month, looked beyond what was written in the contract and focused on the true relationship between the parties. They concluded that there was a clear obligation on the drivers to accept the work once they had logged into the app – with instances of fines being issued where work was not accepted. Furthermore, this decision has wider implications than its predecessors as it established ‘worker’ status for the drivers during the whole time the app was on and not just during a job.

Whilst the decisions mentioned above have been lauded by many, some have been quick to point out that the higher levels of our judicial system have missed a vital opportunity to give more clarity and substance to their decisions alongside the usual emphasis on the individualistic nature the working relationships.

A continual rise in the number of employment claims brought by the ‘gig economy’ workforce is expected and employers should be wary of the financial ramifications claims may have if, for example, multiple members claim an entitlement to their backlog of holiday pay (we know this is possible). When the Independent Review of Modern Employment Practices in the Modern Economy (the Taylor Review) was launched on 30 November 2016 many hoped that key questions on employer obligations and the responsibilities of those not necessarily capable of being seen as workers would be answered. Come 2018 and, much to everyone’s chagrin, the report’s results detailed the requirement for further consultation. It is mooted that said consultation in turn would require consultation and therefore frustration on the part of employees and employers. Clarity, it seems, may not in the offing anytime soon.

Clarkslegal, specialist Employment lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Employment matter please contact Clarkslegal's employment team by email at employmentunit@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.

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Jacob Montague

Jacob Montague
Paralegal

E: jmontague@clarkslegal.com
T: 0118 960 4613
M: 0790 9964 585

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