Employment rights in the ‘gig economy’
The employment status of workers in the gig economy has come into question recently, with some companies insisting that their workers are self-employed contractors; a status which offers their workers little or none of the employment protections that are enjoyed by employees. The gig economy is a phrase used to describe the growing employment trend towards short-term, errand type jobs, where workers secure work on a ‘gig by gig’ basis.
Employment rights are determined by employment status, which can be separated into two main categories – employed and self-employed. But is it as black and white as that? The Department for Business and Innovation Skills, as was, reviewed the employment status of workers in 2015 and challenged unscrupulous companies, some of whom expect their more flexibly employed workers to act the in the same way as permanent full-time employees, whilst denying them access to the basic benefits that an employee might expect.
Companies like Uber, Deliveroo, Citysprint, Autoclenz and Pimlico Plumbers have recently found themselves in the headlines and courts defending their interpretation of employment law and so it begs the question: Who exactly is a worker?
What the law says
Under employment law, there are various tests used to narrow down a worker’s status. These include consideration of who has control in the relationship, whether the workers and employer are financially mutually dependent, the freedom of the employer to turn work down, and whether there are reciprocal obligations between employer to offer work and the worker to accept it. It could be argued that if a self-employed worker is obliged to accept work for fear of losing their next shift, then a mutuality of obligation may exist due to an imbalance in bargaining power.
Shades of grey
It’s vital that a clear distinction is made, since each category imposes obligations on the employer; and each category presents different opportunities and benefits to both employer and the employed. The categories also have different implications for income tax, NI, notice periods and deductions for (or provision of) tools and work equipment.
Some statutory rights apply to every worker and are not discretionary such as the payment of at least the minimum wage and provisions for health and safety.
Help me decide
This should be as simple as referring to the contract but despite what a contract may state on paper, the reality of what happens in practice is given more weight under the law. A series of complex tests have been developed by the courts to determine which employment category a worker falls into. The results of these tests help to determine which specific employment laws apply to an individual scenario.
These tests are not stand-alone evidence of employment status; they are used collectively to determine which responsibilities are expected from both employer and worker. The legal system has gradually come to use a cross-section of tests in order to determine legal obligations, which can be used to differentiate between a contract of services vs. a contract for services (therefore not employed.)
Ask the experts
There are many considerations when determining your obligations as an employer, and the responsibilities of a worker. For advice on your legal employment obligations and for information on how to prepare contracts for workers and employees, please feel free to contact us at West HR at your convenience. We’d love to hear from you.