Gig economy: the direction of travel

02 May 2018

In our last issue of HR Matters, we reported on the new working model commonly referred to as the gig economy (HR Matters Summer 2017, The rise (and fall?) of the ‘gig economy’) and how this has blurred the categorisation of ‘workers’ and ‘self-employed’. A clear direction of travel was emerging, both from the case law and as a result of the Taylor Review, which pointed overwhelmingly towards those working in the gig economy as being ‘workers’. The effect of this recognition cannot be understated, not least because of the rights that are afforded to such workers as a result.

Then came the decision of the Central Arbitration Committee (CAC) in the Deliveroo case and, more recently, the government’s full response to the Taylor Review. Once again, the gig economy has been thrust into the spotlight and it’s clear that the employment status debate is far from over.

What exactly is the gig economy?

Those working in the gig economy are paid for the jobs (or ‘gigs’) that they undertake rather than a guaranteed wage for fixed hours of work. The common example is a driver or courier and much of the case law in this space has indeed stemmed from disgruntled drivers seeking ‘worker’ rights.

However, the gig economy covers a greater and more varied workforce than one might expect. Recent estimates indicate that 1.1 million people are part of Britain’s gig economy, accounting for significant proportions of many sectors, namely:

  • 28% of accountancy, legal advice and other consultancy work
  • 18% of plumbing, building and other skilled manual work
  • 17% of cleaning and other household services
  • 9% of delivery or courier services(1).

Drawing conclusions from case law

The Deliveroo decision is a stark reminder that decisions on employment status require a fact- and context-specific analysis of the true character of the relationship. This involves a purposive approach, i.e. an examination of the individual’s day-to-day tasks and not just the contractual documentation.

It would appear that Deliveroo has found a way to successfully play the employment status system in its favour (at least for the time being). Will other gig economy companies follow a similar substitution model in order to decrease the risk of ‘worker’ recognition? With separate employment tribunal claims afoot on behalf of individual Deliveroo riders, it is perhaps too early to tell.

Government’s position

The long-awaited report of the Taylor Review was published in July 2017 (2). It contained some quite radical proposals which, if implemented, would have a significant impact on employers and not only those in the gig economy. Key proposals included:

  • the classification of employment status should be set out in revised legislation to better reflect the factors that have been taken into account by the courts when determining employment status
  • in cases where employment status is in dispute, the burden of proof should be on the employer to prove that the claimant is not a worker
  • firms with a controlling and supervisory relationship over individuals should be required to treat them as ‘dependent contractors’, entitled to statutory paid holiday and statutory sick pay.

The government’s response to the Taylor Review was published in February 2018(3). Despite promising to take forward nearly all the recommendations of the Taylor Review, the government failed to provide any firm proposals for reforms to the law on employment status. Instead, a further consultation has been launched to consider the legislative options and determine whether alternative statutory approaches could provide greater clarity and certainty. This consultation will be open until 1 June 2018.

Significantly, the rebuttable presumption of ‘dependent contractor’ status as recommended by the Taylor Review is not being taken forward at present.

Attraction to the gig economy

In spite of the current uncertainty of employment status and rights within the gig economy, it is undeniable that this new model of working is still proving popular. In its survey undertaken on Britain’s gig economy, the RSA found that 18% of the working age population (some 7.9 million people) would consider gig work. Young people (aged 16-30), in particular, are attracted to the idea with one in four expressing an interest (4).

What, therefore, are the factors leading to an uptake in the gig economy and could some working in it actually prefer self-employment status? The following were motivations noted in a recent report commissioned by the government (5):

1. Flexibility
The most widely recognised motivation for working in the gig economy is flexibility of work. The most notable reasons for wanting flexibility are:

  • caring or childcare responsibilities
  • studying commitments (students)
  • control over their working time.

2. Income
Some earn their income solely through gig economy jobs but there is a significant number who gig-work to earn purely supplementary household income.

3. Future of work
Owing to the increased prevalence of jobs in the gig economy, individuals may be influenced by the belief that the gig economy is the future of how people will find work.

4. Pursuing the dream job
It is recognised that a number of individuals working low-skilled and short administrative gigs are using the gig economy to fund their career aspirations.

5. Health reasons
Evidence suggests that individuals with physical and mental health issues feel that the gig economy provides a good alternative to traditional employment, either as a lasting solution or to transition them back into employment.

6. Gaining work experience
Some respondents viewed gig work as an opportunity to use skills practically, develop new skills, build a CV or portfolio and network with potential future employers.

7. Redundancy
Some enter the gig economy after being made redundant. Interestingly, many saw becoming self employed as a positive transition rather than a negative experience.

Final thought

It would be naïve to assume that all those working in the gig economy are fighting for, or even want, ‘worker’ status and/or trade union recognition. For some, the pull factors that led them to the gig economy are of greater value.

But as this area of law continues to develop, they may benefit from the best of both worlds. Watch this space (again!)…

(1) Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA), Good Gigs: A fairer future for the UK’s gig economy (April 2017)
(2) M. Taylor, Good Work: The Taylor Review of Modern Working Practices (July 2017)
(3) HM Government, Good Work: A response to the Taylor Review of Modern Working Practices (February 2018)
(4) Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA), Good Gigs: A fairer future for the UK’s gig economy (April 2017)
(5) HM Government, The experiences of individuals in the gig economy (February 2018)

This article is taken from our summer 2018 edition of HR Matters. If you would like to discuss the issues affecting the 'gig economy', please contact Catherine Johnson or a member of our Employment Team. Law covered as at May 2018.