New research published by the CIPD suggests that around 1.3 million people are engaged in the UK ‘gig’ economy – the term used to describe flexible, short-term working arrangements, typically managed through digital platforms.

The ‘gig’ sector has attracted a great deal of press attention in recent months as a string of high profile cases have gone before the Tribunals, testing existing assumptions about the employment status of individuals working for major players in the industry.

Recent protests over pay and other terms have been viewed by many as symptomatic of a wide-spread disgruntlement amongst gig-economy workers over their employment status and legal rights. However, the CIPD’s research reveals a more complex picture, with a significant proportion of gig-economy workers reporting that they are happy with their working circumstances and enjoy the flexibility offered by gig-work, often using it to supplement an alternative primary income.  Nevertheless, the current law on employment status undoubtedly leaves companies and individuals operating in the gig-sector in a position of uncertainty regarding their legal rights and obligations and it’s of no surprise that there have been growing calls for the government to reform the law in this area to reflect modern working practices.

Employment status

The law currently recognises three main categories of employment status. At one end are employees – those working under a contract of employment and whose working arrangements are, to a large extent, controlled by their employer.  The quid pro quo of this ‘master-servant’ relationship is the enjoyment of the full extent of legal rights and protections afforded by UK employment laws.  At the other end of the spectrum are self-employed contractors – those running a business on their own account – who are largely unprotected by employment laws.

Somewhere in between these two categories sit ‘workers’, a statutory creature, who are subject to a greater degree of control than contractors, but whose working arrangements do not reach the high ‘pass mark’ required for full employment status. ‘Workers’ benefit from a limited, albeit important, set of employment rights, including holiday and sick pay, national minimum wage and protection from discrimination.  A key element of ‘worker’ status is the existence of an obligation on the worker to perform work personally.  Recent case law has confirmed that an unrestricted ability to appoint a substitute to carry out a particular job on the worker’s behalf will usually present a bar to the individual establishing worker status (providing that the right can be freely exercised in practice).

Gig “workers”

In a widely-reported decision, an Employment Tribunal recently determined that Uber drivers were ‘workers’ for the purposes of certain employment legislation and therefore qualified for ‘worker’ rights such as those mentioned above. A similar decision has since been reached in a case concerning a cycle courier for Citysprint. Whilst these cases were first instance decisions and not therefore binding, businesses operating under ‘gig’ models may be concerned that the direction of travel in recent case law appears to be towards an increased recognition of worker status in the ‘gig’ sector. However, businesses should keep in mind that question of employment status is extremely fact-sensitive and it is often difficult to draw any concrete conclusions from previous cases given the complexity of the factual analysis underpinning any particular decision.  The boundaries of the current legal tests will continue to be tested as more cases go through the Courts and Tribunals this year, and businesses operating ‘gig’ models will want to maintain a watchful eye on any developments that might impact them in the coming months, seeking specialist advice where needed.

Legislative reform on the horizon?

It remains to be seen whether the government will seek to simplify the current rules on employment status through legislative change, as has been widely suggested. Earlier this month, Matthew Taylor, who is leading an independent review of modern employment practices, reported that Theresa May is supportive of proposals to overhaul of workers’ rights to reflect 21-century working practices.  We will have to wait until June this year when the Taylor Review is due to be published to see what recommendations are put forward.  In the meantime, we expect the gig-economy to remain a hot topic as further decisions emerge from the Courts and Tribunals and the wider political implications of the gig economy continue to be debated.

For more information on developments in this area, please get in touch Ed Hunter at ehunter@reedsmith.com or your usual contact in the team.