The Latest in Law: The Gig Economy Challenge
What is the Gig Economy?
One of the biggest challenges for labour law today is the changing nature of employment. Throughout the 20th century, a very particular model of work prevailed – often described as the ‘Fordist’ model. Whilst women would largely stay at home and care for the children, men would go to work – assuming the role of ‘breadwinner’ from a fairly early age. They would often have just one employer over the course of their entire life. Naturally, this gives considerable security: a regular wage, a pension, social security. In exchange for this, workers would be obliged to work a 9-5 day, often on a production line or something similar. Autonomy over their work would be fairly limited, and they would be subject to considerable oversight or control.
As the global economy is now more focussed on the provision of services than the manufacturing of goods, however, this model is no longer as popular as it once was. The workplace has changed dramatically. It is now unusual for people to remain in one job their whole life – work is often much more transient than this. It is also much more varied in nature. Though this is true generally, one of the most extreme examples of this is the so-called ‘gig economy’. This term has emerged to describe the new and increasingly popular form of employment exemplified by the likes of Uber or Deliveroo. Rather than having a clear and set workplace, such companies provide lots of individual ‘gigs’ to people – often through an app. They may provide their services to several clients in any one shift. They are then paid per piece or trip.
For those who need flexibility in their work life, and want the ability to choose their own hours without too much responsibility, the gig economy undoubtedly has major benefits. It emerged primarily for demographics such as students, or people with another source of income who just needed a top up. It is assumed that these people do not want the job security that traditional employees do – the burden of this outweighs the benefits to them. They simply want to be able to use the skills they have, when they want, in order to make a bit of money when they need it. In this regard, it is often sold as an example of ‘micro-entrepreneurialism’ – with bigger companies facilitating the establishment of lots of small businesses that can be adapted to individual need. Had it continued to be limited to this function, therefore, it is unlikely that it would have become such a source of debate.
As the labour market has become more competitive however, with ‘traditional’ jobs harder to come by, the gig economy has exploded in popularity. More and more people are therefore relying on these individual gigs as their primary source of income. They are in it not because they want flexibility, but rather as they simply do not have an alternative option. The consequence of this is significant instability. Those who rely solely on the gig economy lack a secure source of income, benefits such as holiday or sick pay. If they become ill for instance, or want to have a baby, they are in a highly precarious employment position. It also does not give scope to plan much for the future – pension plans, for instance, are not a feature. When a product of desperation rather than genuine choice, therefore, there are clearly significant drawbacks.
Why Have They Been Denied These Rights?
The question is why it is that gig workers end up in such a precarious position, and whether they should be afforded more protection as a matter of law. Ordinarily, people in employment are afforded a wide range of rights. These are well known and vary from the minimum wage to maternity leave. Clearly, however, in order to receive these, one has to have an employer. It is this question which has been particularly difficult for the gig economy to handle.
Traditionally, labour law has drawn a distinction between those that are ‘employed’, and those that are ‘self-employed’. Those that are employed are entitled to the wide range of protections that labour law provides. In contrast, those that are self-employed do not. It would not be reasonable, for instance, to expect that somebody who hires a plumber to ensure that their home complies with the health and safety standards demanded of workplace. Though being self-employed allows for far more flexibility, therefore, the converse of this is loss of protections and thus a greater degree of insecurity. Important to note is that under the Employment Rights Act 1996, there is also a third category of ‘worker’ who has some of the rights and protections of an employee, but not all.
The reason those working in the gig economy are not afforded rights by the platforms under which they operate, therefore, is because their contracts generally class them as ‘self-employed’. Whilst the platforms connect them to individual clients, the idea is that they facilitate them establishing their own ‘micro-business’, not that they hire them as part of their own. It is therefore this legal distinction which has underpinned the enormous growth in the gig economy. As more and more people have seized the opportunities provided by these firms, however, it has increasingly been asked whether they are in fact self-employed – or whether they should be classed at least as a ‘worker’. There is now authority from the Court of Appeal, for instance, that this is the status that should be afforded to Uber drivers. The concern is that this distinction is being manipulated by platforms, allowing them to wrongfully categorise people so as to deprive them of rights they should be entitled to, thereby maximising their profit. This question of categorisation is therefore the one labour lawyers are currently grappling with.
Employee, Worker or Self-Employed?
The main issue is that in English law, there is no clear test for whether someone is employed or self-employed. This case law, however, is also relied upon to determine the ‘worker’ question. It is perhaps unsurprising, therefore, that it has caused such confusion and potential for exploitation of loopholes. Important to note, however is the fact that a contract stipulates someone is ‘self-employed’ is not relevant if how they work in practice suggests differently. The court will look at the substance of the arrangement, not just the form.
Traditionally, the test was one of ‘control’. If it could be shown that a purported employer wielded a sufficiently significant degree of this over the person claiming employment rights, then they would be considered an employee. When the workplace largely conformed to the Fordist model described above, this was an effective distinguisher. Though the self-employed could choose the hours they worked and who they worked for, employees were those conforming to the overseen, 9-5 model of work. What the gig economy exemplifies, however, is that with mass change to the workforce, this distinction is no longer so simple. Those in the gig economy do not have one clear employer, a set routine, clear and consistent responsibilities – yet nor are they entirely free to set their own terms of work. With these changing realities in mind, the courts have sought to adjust the ‘control’ test. Now, a more multi-factorial approach is adopted, looking at multiple issues to consider the question of how someone ought to be categorised. These include:
Whether a person is required to provide services in person or is allowed to send a substitute;
If he/she is allowed to determine the number of hours they work, their days of work or how much they are paid to do the work;
Written evidence such as a contract of employment, payslips or the requirement to comply with company policies;
Who provides the equipment, specialist tools or uniforms; or
Degree of power and control when taking instructions and deciding the way in which the work should be done.
As noted, the Court of Appeal held that Uber drivers do not have sufficient autonomy to be classed as self-employed. They are subject to a ratings system which can lead them to be ejected from the platform, they are penalised for refusing rides or taking inefficient routes, they cannot send a substitute and do not have control over what they charge. Compared to a small business owner, for instance, they clearly lack the entrepreneurial freedom the platform claims to provide. It therefore was not just an intermediary, but rather contracts with passengers and uses the drivers to meet these obligations on their behalf. Importantly, the court also felt that the organisation was deliberately twisting the language and terms they presented their drivers with in order to try and disguise the reality of the situation. Though the flexibility of the gig economy was intended to benefit workers, it is now being used by employers to construct agreements in such a way that they can avoid their employment law responsibilities and maximise their profit.
Going Forward
Though this multifactorialism has been used in challenges against many of the major gig economy platforms, there are clearly problems with it in terms of certainty. Invariably, such an approach is extremely fact specific. It is very difficult to predict in advance how a party will be classified – leaving many workers without a clear understanding of what their rights are unless they mount a likely time consuming and expensive court case. Given the number and variety of these platforms, therefore, the question is how to ensure that workers are given the protection they deserve, without stripping them of the flexibility the gig economy was originally intended to provide. There is no clear answer to this question, which remains enormously controversial. The scale of this industry however, and the number of challenges that have been brought in recent years, makes this issue a particularly pressing one for the field to have to manage. A recent review, The Taylor Report, has indicated that this issue is one Parliament need to tackle. Though they have yet to do so, the imminent economic downturn suggests that more workers may now have to turn to these more precarious opportunities to make ends meet. It is vital, therefore, that the rights they are entitled to are clearly established, so that they can enforce them as they deserve.
By MU Law Mentor, Sylvie (Sylvie graduated from Cambridge (Pembroke College) with a Double First in Law in 2018, ranked 5th in the year. She is now a PhD researcher at European University Institute, Florence, Italy, where she specialises in Labour Law and commercial surrogacy)
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