In the last week, legislation has been passed in California in an attempt to crack down on companies disguising a workers true employment status. The Bill is being introduced directly in line with the growth of so-called ‘gig economy’ companies, such as Deliveroo and Uber, who have sought to limit workers’ rights in an attempt to boost profits. The move by the State of California is likely to lead to other state legislators in the United States implementing similar laws to combat disguised employment. The difficulty around employment status is not restricted to the United States and remains a prevalent issue here in the UK. The question is what can be done by the UK to combat the rise of the gig economy?

The benefit to gig economy companies

Uber’s UK turnover hit £60 million according to figures published for the year ending 2017 despite regulatory difficulties. The benefit to gig economy companies is clear in that by establishing their workers as self-employed their profits will continue to balloon. They are under no obligation to provide them with basic workers’ rights. By not having to shell out for sick pay or holiday pay their profits rise whilst their workers suffer. More worryingly self-employed workers are not afforded rights under the Equality Act 2010 which offers protection from unfair treatment and discrimination.

The right to strike

Thompsons as a trade union law firm looks to protect the right of workers. One right afforded to employees is the right to strike whereby workers withdraw their labour in order to garner better working rights. This is protected by the law of unfair dismissal where dismissal for industrial action is ruled automatically unfair. Workers within the gig-economy are unable to strike due to their perceived employment status as self-employed. This limits the power of collective organisation and leaves the gig economy worker who is already in an unfair situation even more restricted in their methods of redress.  

Current position of the Courts

In December 2018, Uber lost their appeal to have a 2016 Employment Tribunal judgement overturned. The Court of Appeal ruled that Uber staff were entitled to holiday pay, paid breaks and to receive the minimum wage, basic working rights that should be afforded to any employee. However Uber have subsequently been granted leave to appeal to the Supreme Court, who will ultimately make the final ruling.

The test of whether a worker is an employee or self-employed remains fundamentally ambiguous and is a question of law. Regard has to be had for several factors such as the control exercised by an employer over their workers and how integral the worker is to the business. A factor also to be considered is whether the employment relationship had been artificially construed. What can be seen when considering ‘gig-economy’ companies such as Deliveroo and Uber is the extent of control they exercise over their workers. 

Two of the three Appeal Court judges in their ruling against Uber came to the position that Uber exerted a high degree of control over drivers which in turn entitled them to the status of worker.  The difficulty in establishing in law the employment status is highlighted by the third judge ruling they were no different to min-cab drivers and that the arrangement was not artificial. He did however comment that there was a requirement for greater protection for gig-economy workers.

How can the issue be resolved?

The UK has been slow to take any necessary steps to tackle the issue appropriately. The nature of work within the UK is ever changing with many employers detracting from the standard nine to five. The truth is that the law is struggling to keep up with the evolving labour market. There is yet to be the introduction of a statute that can effectively tackle the issues meaning that the issue is regularly being left to the responsibility of employment tribunals and the Courts to consider the issue of employment status of workers. The UK ought to learn from the approach taken by California and look to implement statutory intervention to resolve the exploitation of workers by big businesses out to solely drive profits. It would appear that for once the UK can learn from the legislators in the USA.

For more on the gig-economy, the following is an article by my colleague Deirdre Flanigan: Diabetics and the gig economy.

Blog by Conor Kenny