As the gig economy has grown and developed, so too has the law relating to so-called “gig workers” and how their employment status should be regarded. Claire McKee, Associate at Dentons examines what this means for both the employer and worker, what the law states around this, what the future gig economy landscape might look like and what the law still needs to do to keep up

Claire mc kee

Claire McKee, Associate at Dentons 

In November last year, the Employment Appeal Tribunal rejected app-based taxi firm Uber’s appeal against the Employment Tribunal’s earlier decision that their drivers should be categorised, in the eyes of employment law, as workers rather than self-employed contractors. This landmark decision, which Uber has appealed to the Court of Appeal (following an unsuccessful attempt to leapfrog straight to the Supreme Court) has essentially widened the definition as to what may constitute a worker and potentially conferred rights upon millions of those working within the UK gig economy.

This decision may also have given rise to a shift in the attitudes of gig sector companies towards their workforce, particularly in relation to reward. For example, Deliveroo last year announced the decision to offer its riders illness and accident cover through a 3rd party insurer. This mirrors the US example of “The Black Car Fund” which is a benefits platform for limousine and black car drivers in New York. It is a not-for-profit insurance provider that provides compensation for drivers that are injured while working. It works by adding a 2.5% surcharge to passengers’ fares for drivers that are in the scheme, entitling drivers to claim in case of injury. Whilst starting to offer some “employee like” benefits, it is important to note that Deliveroo still maintains that, within the definitions offered by current employment laws, its riders remain classed as self-employed, and not as workers.

The gig economy is ripe for the use of WorkerTech solutions which can provide a vehicle for facilitation of information sharing and calculating and accessing benefits. Certainly WorkerTech Catalysts, which are essentially platforms or cooperatives working together to develop innovative ideas using tech to support the low-wage workforce, work to accelerate innovation, by offering targeted support as well as access to investment needed to innovate. These were recommended by the Taylor Review (“the Review”) in its 2016 Independent Review of Employment Practices in the Modern Economy. The review stated that portable benefits platforms provide ways for people who are self-employed or engaging in other non-traditional labour market activity to gain access to a range of non-statutory benefits and protections and that unlike the statutory employment protections enjoyed by workers and employees, portable benefits reflect the more dynamic working arrangements of many self-employed people. This might cover benefits such as sick leave, holiday leave and pension plans.

The controversy surrounding the status of gig workers, and how they may potentially be exposed by companies operating within the gig economy, is presumably Deliveroo’s motivation in providing its riders with new benefits. We may well see more gig operators follow suit, as it could provide gig workers with a much needed extra incentive in light of the social and political storm that is the gig economy, and, and the very least, provide companies like Deliveroo and others with some much needed good press. As the gig companies compete with each other for a flexible workforce to suit their needs these incentives would no doubt become a tool for encouraging gig workers to join one over the other, as with traditional benefits packages in the contract of employment model. In doing so, however, organisations will seek to avoid crossing the boundary into what may be considered as an employer/worker relationship. The key issue for firms such as Uber and Deliveroo is flexibility, something they insist their drivers and riders are also keen to maintain. Based on the current state of the law, this flexibility is what potentially stands in the way of gig workers being legally recognised as employees and being granted the security that comes with this status.

With the gig economy growing, employers are potentially more likely provide gig workers with select benefits of their choosing in an effort to encourage engagement in the industry (not least due to the Taylor review recommendations around benefits). For now, this could well ease any pressure to provide them with the full statutory entitlement afforded to workers – a compromise that could maintain their desired level of flexibility. In time, it might be that the resultant administration or bureaucracy of providing benefits to gig workers means that organisations will have to weigh up the pros and cons of reverting to traditional contracts of employment. Certainly organisations will be cautious that the provision of benefits, to attract genuine gig workers, does not result in them hiring permanent employees “by the backdoor”.