Gig Economy Inquiry

October 9, 2018

This year has been filled with developments in the employment law sphere. One particular area of employment which has received significant media attention is the gig economy. The gig economy can be described as a "labour market characterised by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs". Recent judgments regarding companies such as Uber and Pimlico Plumbers have found that those within the gig economy are to be treated as 'workers', as opposed to being 'self-employed'. This distinction is important as the decisions afford 'workers' more rights in law. In response to the recent developments, an inquiry has been launched by Work and Pensions Committee Chairman, Frank Field MP. The purpose of the inquiry is to explore the extent of alleged “employment law evasion” in the gig economy. This is a commonplace issue in contemporary society, even on an international level. Interestingly the government of Victoria, Australia, has also called for an inquiry into the gig economy. This will include scrutiny of Uber Eats and Deliveroo.

 

 

Uber and other firms, including CitySprint, have been informed they are likely to be called to give evidence at the parliamentary inquiry into gig economy companies. The inquiry comes after a long line of tribunal judgments against companies, which ruled that couriers and taxi drivers should be classified as workers and entitled to holiday pay and the minimum wage. The companies concerned failed to deliver those rights across their workforce and argued that their drivers and riders were self-employed contractors. This was also the case in the Pimlico Plumbers case that reached the Supreme Court in June 2018. The depth of the problem can be highlighted by the examples below.

 

Despite losing its cases, Uber is continuing to fight against a detrimental judgment from 2016. This will coincide with the parliamentary inquest as the case is due to be heard before the Court of Appeal in October 2018. Although Uber is challenging the original judgment, it has implemented some changes for its drivers. Amongst these changes are a 24 hour telephone support line, limited working hours, and a degree of insurance for their drivers. However, Uber has insisted that its drivers want to retain the flexibility to choose their own hours. There have also been issues within the Uber Eats division of the company, which had been subject to protests over pay structures.

 

It appears that the changes in the law have not been fully understood, nor implemented immediately. In May 2017, for example, eCourier failed to class its drivers as workers. Whilst the firm did admit that the driver in question was wrongly listed as an independent contractor and wrongly denied standard employment benefits, they did immediately announce a review into how it could implement the same worker status. This seems to have been applied on a case by case basis, as not all drivers with eCourier were listed as workers.

 

Shockingly, in November 2017, City Sprint changed the contracts of its couriers, as opposed to giving them the statutory minimum wage and holiday pay. City Sprint argued that the changes better reflected its relationship with cycle couriers. This was in the face of an employment tribunal case on the issue which saw City Sprint lose.

 

Whilst the parliamentary inquiry has generally been met by favourable reviews and applauded for its intent to reform the law, there has been criticism. The Independent Workers’ Union of Great Britain have questioned why it has taken so long for any change in the law to occur at a higher level, namely within statute.

 

In full, the gig economy inquiry will look at the following points and will hopefully provide solutions to the issues posed:

 

  • How frequently gig economy companies reach a settlement with workers seeking to bring an employment tribunal claim against them;

  • How frequently they have received tribunal claims and lost their case;

  • The consequences of settlements and tribunals have had on the pay and conditions of individual workers and their workforce as a whole;

  • Examples of where the changes arising from employment tribunal verdicts have been applied across companies’ workforce or to staff on similar terms;

  • Examples of companies failing to apply the findings from settled claims or employment tribunal decisions, in full;

  • Which moves, if any, have been taken by companies to counteract, delay, or evade the justice system, and the steps required to prevent this from happening; and

  • Whether employment law and enforcement reforms are needed to ensure gig economy workers receive statutory protection.

 

The potential implications of the inquiry include a fundamental change to the law in an employment sphere which would better protect the rights of those involved in the gig economy. There has already been a proposal to introduce a new Bill regarding the gig economy, which will essentially provide those within the gig economy with a ‘worker by default’ status. The result of this would involve employers offering basic rights such as sick pay and holiday pay to their workers who previously fell within the gig economy regime. The proposed Bill would have a dual effect; it would tackle the perceived exploitation of such workers and it would also address any uncertainty in the law. The latter is apparent as a contradictory decision from the Central Arbitration Committee, which found that Deliveroo riders are self-employed as opposed to workers, could be misunderstood. On top of the proposed Bill, the Business, Energy & Industrial Strategy Committee have provided further recommendations that may tackle the issue. Whilst this does address the issue of loophole exploitation and the non-payment of tax, it has been recognised that the proposed regime places the burden on businesses and risks reformulating the already difficult question of what is genuine self-employment.

 

This is a positive move forward by the UK. It is an attempt  in order to address fundamental exploitation of workers, although concerns still exist. It would appear that this does run the risk of being rushed owing to the growing pressure on ministers to speed up measures on the gig economy. It should be noted that within the inquiry itself there will be a review of recent settlements between companies and their workers, as well as recognising the gig economy companies that have honoured their obligations under employment law. There is further uncertainty as to whether the suggestions from the Business, Energy & Industrial Strategy Committee will be followed and whether the new Bill will be implemented. These remain to be seen, although the current inquiry is sure to play a pivotal role in the future direction of the gig economy within UK employment law.

 

 

 

 

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