The future of the Gig Economy: bust or boom?
14th March 2017
Sally Gwilliam, Head of Employment Law
The “gig” economy is being used ever increasingly to describe the workforce of people who earn a living by freelancing in temporary jobs, usually being paid per “gig” (normally through an online platform or app) instead of earning a regular wage. It is estimated that over 5 million people in the UK now work in this way, with large US and UK companies putting this model into the media spotlight.
So what’s the issue?
Genuine self employed freelancers do not enjoy the same legal protections as they would as a “worker” or an “employee”. This means, for example, they have no right to paid national minimum wage, take rest breaks or receive paid annual leave. Conversely, however, for an individual who wants to be their own boss and manage their own time, the flexibility of being a freelancer can work well.
Legal issues have arisen where individuals feel exploited by this working arrangement where they argue they neither have the flexibility to choose the hours they work or the control over their own working week, yet have no employment protection.
This has been highlighted in recent cases brought against Uber and Pimlico Plumbers where it has been held, based on examining the true working relationship between the individuals and the businesses, that the drivers and plumbers were in fact workers. Further challenges are now being brought against Deliveroo, The Doctors Laboratory and the courier company, DX.
What does this mean?
While Uber has launched an appeal, it appears the tide is turning and the employment tribunals have made a number of findings that individuals who were labelled as self employed, were in fact workers. So is this the end to the gig economy as we’ve known it? Given the numbers and individuals working in this way, and the flexibility offered to both the corporates and the individuals we consider it is here to stay. That said, its place appears to be where the individuals genuinely benefit from this working relationship, including flexibility, choosing hours and level of pay. Where this is not the case, the tribunal and courts are currently unwavering from ensuring individuals who are in reality obligated to provide a personal service to the company, are protected as a worker.
Despite the current negative media on being part of the gig economy, there can still be significant advantages to businesses to use freelance workers. For more and more businesses, the demand for workers is cyclic and companies may consider hiring freelance workers when business is in demand and offer less ‘gigs’ when business is low. At Genus we can see the benefits to employers in considering engaging individuals in different ways, be it freelancers, workers or employees and we can advise how best to engage individuals and the risks of the recent case law surrounding this area.
Should you wish to discuss how the gig economy may benefit your business or if you need assistance in managing a flexible workforce, please contact the Employment team at Genus Law on 0113 320 4540 or e-mail [email protected].