What is the Gig Economy?
The phrase the ‘gig economy’ is increasingly being seen in the press and often it is referred to in employment disputes.
What does it actually mean though? It is probably best summed up as a trend towards a working environment where temporary positions are common in business and companies (often larger companies) use independent individuals for short-term engagements instead of full-time employees.
People in these roles are paid by each individual ‘gig’ they do – such as a food delivery or a plumbing job – and this is sometimes instead of an hourly rate.
Is there a problem with the gig economy?
These sorts of roles are more commonplace in sectors such as transport (Uber), retail (Amazon) and food (Ocado).
Some individuals like working on this basis as it gives them flexibility, especially if they want to work on a part-time basis.
The concern, however, is that other individuals have no choice but to work on these terms on a full-time basis but without any job security or guarantee of hours.
You may also hear the gig economy referred to at the same time as zero hours contracts, but this is a slightly different arrangement. What zero hours contracts do have in common though is that there is no guarantee of work and little job security.
So, some people think the gig economy is a working environment that supports flexibility and others think it is an environment full of exploitation with no protection. There are around 5 million people who work on this basis in the UK.
What has happened recently?
There have been a number of cases recently which have gone against a company seeking to establish that the individual in question was genuinely self-employed.
Last October, Uber lost a claim brought against it by some of its drivers seeking to be classed as workers rather than independent contractors. They were therefore entitled to holiday pay, paid rest breaks and the national minimum wage. This decision is being appealed.
City Sprint also lost a claim from one of its couriers that they should be classed as a worker.
The latest company to lose is Pimlico Plumbers. Here, even though the individual concerned (Mr Smith) was VAT registered and paid tax as if he was self-employed, the court held that he was, in fact, a worker and again was entitled to basic rights.
Why is this decision important?
The trend from these cases is clear – even if the written terms point towards a self-employed relationship, the courts will have no hesitation in looking at how the relationship operates in practice.
You will need to look at factors such as how integrated an individual is in the business, what are the expectations re hours and manner of working, is company equipment provided. We will go into this in more detail in the near future.
Also, remember that an individual’s status for tax purposes is separate to their status for employment purposes.
What we can do for you
These cases do not mean that an individual cannot be engaged on a self-employed basis but it will be dangerous just to rely on the contractual label. Look at how the relationship operates in practice.
We can go through the working arrangement with you to identify any areas of risk and also review your contractual papers to see if they are sufficiently watertight.