The gig economy has reconfigured the way in which people participate in the labour market and has blurred the lines between classifications of employment status. In February this year, the UK Supreme Court ruled that Uber drivers should be classified as workers rather than self-employed contractors, which could set a precedent for the employment rights those involved in the ever-expanding gig economy are entitled to.
THE RISE OF THE GIG ECONOMY
The Institute for Employment Studies (IES) proposes the following working definition of the gig economy: “the gig economy involves the exchange of labour for money between individuals or companies via digital platforms that actively facilitate matching between providers and customers, on a short-term and payment-by-task basis”.
This free-market system is most commonly associated with globally recognised companies such as Uber and Deliveroo, but also involves a host of other occupations from freelance writers and software developers to Airbnb hosts.
The gig economy has exploded over the last decade and roughly 150 million people across North America and Western Europe now work as independent contractors. If the current rate of growth is sustained, 50 percent of the US workforce will be involved in the gig economy by 2027.
THE GIG ECONOMY AND WORKER’S RIGHTS
Many people cite the independence and flexibility of the gig economy as a major pull factor. However, as independent contractors they are not eligible for the same employment benefits as those in the traditional labour market.
The UK sets out three categories of employment status:
Employees – someone who provides services under an employment contract and has a full range of employment rights including redundancy and sick pay.
Workers – self-employed persons who provide their services as part of a business carried out by a third party and therefore are eligible to a limited set of rights such as national minimum wage and holiday pay.
Self-employed – people who carry out business independently with clients and have no employment rights.
The gig economy has blurred the lines between classifications of employment status. The third-party companies who connect providers with clients often claim that those operating within the gig economy are self-employed and are therefore ineligible for employment rights.
The 2017 Taylor review set out detailed tests for improved clarification of the definition of “worker” in light of evolving modern working practises, stating that this should relate to the level of control a business has over an individual. However, the UK government has yet to publish such legislation.
UBER CASE STUDY
Uber argues that its app is just a platform which connects self-employed drivers to passengers, rather than Uber itself acting as an employer. In 2016, an employment tribunal ruled in the favour of former drivers James Farrar and Yaseen Aslam, finding that they should be classified as workers and therefore entitled to some employment rights. This decision was upheld by the UK Supreme Court earlier this year following an appeal by Uber.
The Supreme Court cited Uber’s level of control over its drivers as to why they should be classified as workers, such as Uber setting fares and not sharing a passenger’s destination with the driver until after they have picked them up. The court ruled that drivers should be considered workers from the moment they log on to the app and should be paid minimum wage for the duration of their shift whilst in an area covered by Uber’s licence.
In a statement released immediately after the Supreme Court’s verdict, Uber argued that its findings were only applicable to a small number of drivers who were using the app in 2016. The company stated that subsequent changes to their operating model have since given drivers full transparency over trip length and duration and therefore the examples of control cited in the ruling are no longer relevant.
Uber’s response suggests that it might not accept its current drivers should be classified as workers, meaning that newer drivers would need to raise their own case in court. Uber stated that they will launch a nationwide consultation with current drivers about their experiences and seek their thoughts on necessary improvements, however the findings of this have not yet been released.
WHAT DOES THIS MEAN FOR THE GIG ECONOMY?
The Uber BV v Aslam case is one of about 1,000 cases challenging the employment status of those involved in the gig economy. Paul Jennings, partner at Bates Wells, the law firm who represented the Uber drivers, says that the Supreme Court judgement is the first of its kind on the gig economy and that it will have a broad set of implications for the four to five million people in the UK who work in similar business models.
However, although parallel can be drawn between different gig economy businesses, there is room for ambiguity. In 2018 the High Court ruled that Deliveroo riders cannot be classified as workers due to the substitution clause which allows multiple drivers to carry out work from the same account.
Furthermore, “worker” is a UK-specific classification which is not transferable to those working in the gig economy in other countries. In November 2020, Uber and Lyft emerged victorious in a battle in California to allow drivers to continue to be classified as independent contractors and not employees.
Meg is a final year student of German and Politics at the University of Bristol. She is particularly interested in international relations and bringing light to the human rights abuses perpetrated by governments around the world. Her goal is to work in advocacy after university.