Is the gig over?

The gig economy is booming. If you haven’t heard about it or assume we’re talking festivals and live music, you may well have been hibernating for the last 18 months. With the rise of businesses like Uber, Deliveroo and Air B ‘n B, an entire industry has developed before our eyes – otherwise known as the ‘gig’ industry, so called as individuals choose to make their living working gigs rather than being a slave to full time work. The digital world hasn’t just provided for individuals to become hoteliers and taxi drivers – over a million creative mini-entrepreneurs, now sell their home-made wares through the website Etsy. In early 2016, the Office of National Statistics (ONS) published data that suggests 5.35 million workers are employed in the public sector, compared to 4.61 million workers operating on a self employed basis. This figure seems set to rise. In terms of the worth of the gig economy, in the UK alone, it was estimated to be worth £0.5bn in 2014, and by 2025 the ONS forecasts the sector’s worth to hit £9bn. This explosion of small scale freelancing and entrepreneurship is clearly a powerful social trend.

However the growth of the gig economy has faced criticism from across Europe, with claims that it is damaging traditional industries and stripping workers of their fundamental employment rights. Critics of the industry claim many of those on the periphery of the gig economy are effectively employees, who should be granted employment rights. A recent challenge has been brought against Uber. Two drivers are claiming they are entitled to basic employment rights and an Employment Tribunal has been asked to decide whether the company acted unlawfully by not providing drivers with these rights. The drivers claim they are workers, and entitled to minimum wage and holiday pay. Uber maintains they are self-employed.

No definitive test can determine employment status. The factors to take into account have developed through case law. Generally speaking, if there’s an obligation on the person to turn up for work and an obligation on the company to offer work, it’s possible an employee relationship could be starting to develop. The more autonomous the person is, in how they can do their job, the more likely they are to be self employed.

An employee is someone who has entered into a contract of employment. To be an employee, individuals must provide their own service personally, and there must be mutuality of obligation and control by the employer.

Workers – It is very common to have an agreement between a business and an individual that simply says that the business will not guarantee hours and the individual is free to turn work down. This is not an employment contract, but a causal worker agreement. Under this agreement the worker still agrees to personally perform work or provide services to another party. This means that many people who might otherwise be regarded as self-employed are in fact workers and entitled to some statutory protection – there lies the potential issue threatening the gig industry.

How we can support

Our expertise within our Employment and HR team enables us to support employers in establishing the most appropriate agreement between staff in your business. To avoid potential challenges it’s critical to properly assess how a person will operate for the company and set out the agreement between the person and what’s expected of them, from the outset of any engagement.  What we can learn from observing the rise of the gig industry is that determining the employment status of any new recruit from the outset, is critical.

We can support you in drafting sensible, practical agreements which set out the self employed / worker / employee position in relation to the Company’s position. For more information on our HR consultancy offering please contact Bex Sinclair, Head of the HR Consultancy Team on 0345 209 1831 or email bex.sinclair@clarkewillmott.com.