How firms can easily fall foul of Britain's growing 'gig economy

29 August 2018

Grey areas that shroud the UK’s burgeoning ‘gig’ economy have seen a number of high-profile court cases, highlighting the growing employment rights debate.

With an estimated five million UK workers now engaged in this way, the cases seen so far could be the tip of an employment law iceberg as publicity leads to more questions and claims regarding employment status, together with associated rights and entitlements.

Latest figures from the Office of National Statistics show the number of self-employed people in the UK has risen by 45 per cent since 2001. In 2017, more than 15 per cent of the UK labour force was classed as self-employed.

Businesses and individuals may both enjoy the flexibility that the gig economy and self-employment brings, however the question is whether employment law accurately reflects and addresses this modern way of people engagement introduced via technological change.

Nationally, the case involving Uber drivers has arguably been the most high-profile of late, with the employees winning their right to be classed as workers rather than independent contractors and should have received the associated rights such as the national minimum wage and holiday pay.

There followed, in June, the news that Pimlico Plumbers’ founder Charlie Mullins had lost the landmark Supreme Court challenge against the decision that Gary Smith was a worker rather than a self-employed contractor. Mr Smith had worked for the business for almost six years until suffering a heart attack and Pimlico Plumbers terminated the relationship around four months later.

Judges ruled he should have been treated as a worker and given paid holiday and sick pay as well as other perks, despite being classified as self-employed in writing, submitting tax returns on this basis and being registered for VAT. Their decision was based on the facts that Mr Smith was required to use the firm’s van for assignments, was contractually obliged to do a minimum number of hours per week and Pimlico had tight control over the work that he carried out.

In the Humber region, like others, the gig economy has seen an explosion in popularity – ‘gig’ being a term meaning people are paid for the ‘gig’ they perform, in other terms self-employed contractors.

This relationship very often works extremely well and reflects the modern working world. What businesses need to ensure is that there is a clear understanding from the outset between themselves and the contractor or consultant and that the nature of the relationship is reflected in a well drafted agreement.

The construction industry has been an area which is well known for its use of contractors for decades now – but other sectors are catching up as a flexible labour force is seen as a way of managing the needs of a business and work flows more effectively.

However, the relationship can cross boundaries beyond genuine self-employment into the status of a worker or even an employee in some cases. It may be necessary for a contractor to have a company email address for example, or be seen in a staff uniform or, like the Pimilco case, use a company vehicle. If allowed to continue and other factors, such as control and personal service are present, then an individual could claim they should be afforded the same rights as a worker or employee – for example pension entitlement, sick and holiday pay, rest breaks, the right to receive the national minimum or living wage and the right not to be discriminated against.

This self-employment growth is now the focus of a Department for Business inquiry, as the Government looks to ensure its employment rules are up to date to reflect ‘new ways of working’.

However, with Brexit being the main focus of the Government, any changes in law will be a long-time coming and in the meantime, it would be prudent for businesses to review their working practices, including all contracts and documentation, regarding the use of consultants or the self-employed in order to mitigate risks of a challenge.

For further information, please contact Oliver Tasker at our Lincoln office on 01522 515987, or by email; oliver.tasker@wilkinchapman.co.uk


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