What is the gig economy?
The FT has defined the gig economy as people supporting themselves as freelancers/self-employed, often working a number of part-time jobs with no access to basic worker’s rights. The UK government is working on ensuring people in the gig economy are being treated fairly in terms of pay, hours and health and safety. The government is also concerned that it is losing out on an estimated £4bn a year in tax, (this figure also includes zero hour contract workers and others in insecure employment).
The upside of the gig economy for many is that it allows people to manage their own work-life balance, as well as providing an opportunity for some to earn extra money over and above their ‘day’ job. Employers can call on the skills they need on a project-by-project basis and it saves on labour costs as they aren’t paying for the benefits that employees would receive.
Clarity for workers in the gig economy
A number of high profile court cases have recently highlighted the grey area between self-employed and worker status for working people employed on a job-by-job basis.
Amongst other criteria, a worker is defined as someone:
- Who has a contract or other arrangement to do work or services personally for a reward (the contract can be verbal).
- Who has to turn up for work even if they don’t want to.
- Whose employer has to have work for them to do as long as the contract or arrangement lasts.
- Who isn’t doing the work as part of their own limited company in an arrangement where the ‘employer’ is actually a customer or client.
As a worker they are entitled to basic benefits from the employing company which a self-employed person is not, which include:
- Receiving at least the National Minimum Wage.
- Protection against unlawful deductions from their wages.
- The statutory minimum level of paid holiday of 5.6 weeks a year, (although an employer can count bank holidays as part of the 5.6 weeks).
Defining the difference between self-employed and workers
The highest profile case has been Uber, the taxi app company currently valued at around $50bn. Uber has 40,000 UK taxi drivers on its books. Uber argued that the taxi drivers were self-employed and merely used the Uber software platform to link up with passengers. It was demonstrated however that Uber was very much in control and drivers were often not receiving even the national minimum wage. A more recent ruling against City Sprint, a courier firm, found that it’s couriers were also effectively workers rather than self-employed. Uber is set to appeal against the ruling and City Sprint is considering the ruling.
It isn’t just transport companies in the spotlight. Pimlico Plumbers comprises self-employed plumbers who work exclusively for the company. The company generates the work and allocates it to the plumbers. Plumbers provide their own materials but the branded vans are hired by the plumbers from the firm. The company argued that the plumbers were self-employed as they paid their own tax and were VAT registered, in this case the plumbers were said to be paid well.
The issue arose over a plumber who wanted to cut his number of working days after a heart attack. The company wouldn’t agree to the cut in days, took away his van and he was effectively dismissed. The first tribunal found in the individual’s favour, that he was a worker and entitled to basic worker’s rights because he had to work exclusively for the plumbing company and the work was tightly controlled. The plumbing company took the case to the Court of Appeal which upheld the previous ruling. Pimlico Plumbers say they have now tightened up the contracts for the self-employed plumbers and are considering going to the Supreme Court.
The UK government is currently conducting a review of workers rights in the “gig economy”, the Taylor Review is due to report later this year.
Managing ‘flexible’ workers
Our workforce management system helps businesses to effectively and efficiently manage workers, employees and contractors, ensuring hours are accurately logged and the correct pay rates and benefits are applied to each individual. That holidays, breaks and hours worked are compliant.
The scheduling module ensures you have the people with the right skills in the right place at the right time, whether they’re self-employed, workers, employees or agency staff.
UK Government website – Employment status
Courier gig economy case – BBC News