Rights and obligations in the ‘gig economy’

There has been much discussion lately regarding the rise of the ‘gig economy’ and the focus it has placed on the necessity for both businesses, and the individuals they engage, to clarify their terms of engagement and associated rights and obligations.

The gig economy is characterised by workers being engaged on a short-term contract or freelance basis, and takes its name from people being paid for the ‘gigs’ they carry out, for example, a food delivery or taxi journey.

In recent months, we have seen individuals engaged by a number of household name companies including Uber and Deliveroo, take steps to assert their rights. In the much-publicised Uber case, drivers were found to be ‘workers’ who were therefore entitled to certain employment law rights such as paid annual leave and the national minimum wage. Deliveroo couriers, who are currently engaged by the company as self-employed contractors, are also taking steps to determine their employment status.

Other examples, including blood couriers working for The Doctors Laboratory who have lodged a claim at the employment tribunal challenging their status, have fuelled debate over how legitimate the gig economy is, and whether firms are unfairly using this to their advantage.

Recent figures from the CIPD show that the gig economy, which is estimated to include around 5 million workers, is working for many people. 50% of people surveyed by the CIPD said they had greater independence and flexibility as a result of working on a casual or freelance basis, and 46% were happy with their working circumstances.

However, 57% of the people involved in the study also said they believed many companies were exploiting the lack of regulation around the gig economy to achieve instant growth, with 63% calling on the Government to ensure basic rights for workers.

While freelance working, or workers being engaged on a short-term contract or casual basis, is by no means a new concept, the significant growth in this type of working relationship, combined with the recent high profile challenges we have seen, has given a timely reminder of the need for businesses to be clear as to the basis upon which they are engaging individuals. Businesses need to be clear as to their obligations from the outset, and be aware of their legal obligations, taking expert advice if in any doubt.

With the working practices coming under a very public magnifying glass, there have been calls for greater regulation around the gig economy and questions raised as to whether there should be a change in workplace rights as a result. In October, the government commissioned the Independent Review of Employment Practices in the Modern Economy to specifically look at the implications of new models of working on the rights and responsibilities of workers. Last week, the Chair of this review, Matthew Taylor, confirmed that this will recommend changes to the rights of self-employed workers when it is published later on this year.

Engaging workers in the gig economy is a formula which is proven to have its advantages but it is important that it works for both sides. Clarifying your legal position and obligations from the outset and staying abreast of the likely changes in this area, are essential.

Catherine Hope is an Associate in the Employment team at Sintons. To speak to her about this or any other matter, contact Catherine on 0191 226 3801 or Catherine.hope@sintons.co.uk