Work status in the ‘gig economy’

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Posted in:HR and Employment|January 23, 2017 | Join the mailing list

In a series of recent rulings, the status of self-employed workers has been blurred, resulting in a significant increase in worker rights.

The Employment Tribunal recently ruled that Uber drivers are not self-employed individuals but workers, and should be paid the national minimum wage and holiday. This breakthrough case could affect approximately 40,000 drivers in the UK who, up until now, would not have been entitled to holiday pay, the national minimum wage or other worker rights. An appeal by Uber has been lodged.

Further, in a case this month, against CitySprint, a cycle courier was found by the employment tribunal to be a worker and entitled to holiday pay and other rights.  CitySprint has over 3,500 self-employed couriers in the UK and this decision could lead to a floodgate of further claims. The judgment placed specific emphasis on the growing pressure on employers in the gig economy to treat workers more fairly and offer basic employment benefits.

The courier argued that she, and others, do not enjoy the flexibility that many assume they have; they spend the majority of their time being told “what to do, when to do it and how to do it”.  It was determined by the Employment Tribunal that because the courier did not have the autonomy of a self-employed individual they should be awarded the basic employment rights.

The First Tier Tax Tribunal has also recently taken this subject one step further in a judgment that states a checklist approach to the indicators of employment status is not the appropriate methodology; stating that it is imperative to step back and look at the whole picture.  In Dhillion and Dhillon v HMRC a haulage services company engaged drivers who were paid a fixed amount per shift would refuse work and were not guaranteed work and no supervision other than an initial induction.  However, the Tribunal found that the drivers were in fact employees during each individual contract and considered the degree of control exercised and the fact that the drivers were not in business on their own account, both relevant features.

What are the implications for the gig economy?

The recent trend of Employment Tribunal decisions finding in favour of the workers comes at a time when the government reviews modern working practices and HMRC sets up ‘the employment status and intermediaries team’ to investigate companies.

This is an area that will continue to have significant developments given the increase in businesses within the gig economy and widespread use of independent contractor business models.

Immediate action is required

Whilst we await the outcome of the government’s current consultations, employers should carry out a risk assessment by conducting an audit of their workforce, the documents governing the relationship and the working practices.

To find out more about the issues raised in this post, or to discuss any queries please get in touch with Michelle Gray on or call +44 (0) 161 829 2599.
The information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by berg or any of its partners or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

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