Organisations such as Deliveroo, Hermes, and Uber are rapidly becoming household names. Indeed, Uber (which uses a smartphone app and cloud based technology to link up drivers with people who want a ride) is now worth billions of dollars. For such large enterprises however, these organisations have hardly any ’employees’.
The reason for that is that such entities operate within what’s known as the ‘on demand’ or ‘gig’ economy, via which they tend to use smart phone and cloud based technology to engage drivers and cyclists etc to provide ‘as and when needed’ services as self-employed independent contractors.
Proponents argue that this is a wonderful model under which individuals have a huge degree of flexibility to pick and choose what they do or don’t take on and can fit their work around childcare or other responsibilities, and perhaps even around other ‘main’ job(s) elsewhere. Critics on the other hand argue that it’s a system that’s wide open to abuse.
Having the level of flexibility of engagement that the true ‘gig’ economy operators have in place would appear to have scope to be massively valuable to a large array of businesses in Cornwall, especially where staffing needs are heavily seasonal. However, if it’s something that you’re considering, then a flag of caution has now been raised by a recent decision against transport giant Uber. There, an employment tribunal has found that its drivers are not in fact genuine ‘self-employed’ contractors and instead have ‘worker’ status and associated rights. This landmark ruling may have considerable practical consequences for those operating with a similar business model.
Firstly, it’s important to note that the Employment Tribunal didn’t award Uber’s drivers employee status, and that there is a difference between ‘workers’ and ’employees’. A worker is an individual working under a written or verbal contract to personally perform services for another party. There are lower thresholds to meet the definition of a worker than an employee, but the concept also attracts fewer rights.
Unlike employees, workers don’t have a right not be unfairly dismissed, to receive redundancy pay, sick pay, and paid parental leave. However, workers do have some basic rights; including the right to be paid National Minimum Wage, receive whistle-blower protection, paid annual leave, and sufficient rest breaks.
Uber will undoubtedly appeal the decision, however if it’s upheld, this will lead to quite a notable change in their working practices and better protection for all those providing services under a similar model. Drivers are currently paid on a commission basis per job done, but may need to be recompensed for time spent logged into the app and waiting for work in order to be paid minimum wage.
Moreover, drivers don’t currently receive any rest breaks on shift or paid holiday, a fact which the company justifies through their ability to pick and choose when they work. If Uber drivers’ worker status is affirmed, however, they will need to take legally required breaks and would accumulate paid holiday in proportion to the number of hours they work.
Other gig economy businesses needn’t panic just yet – the Uber decision isn’t binding on other employment tribunals for now, and an appeal is expected. What’s more, the court didn’t say that Uber couldn’t devise an operating model that didn’t involve engaging the drivers as workers: it simply found that the company’s current structure failed to do this.
In general, however, the judgment appears to reflect the UK’s general desire to stop big business from using flexible working models as a means of exploiting the most vulnerable. A government investigation into abusive practices surrounding flexible working at Sports Direct, for example, led the company to announce this September that it was scrapping zero hour contracts.
There’s no doubt, however, still a place for the gig economy provided that those offering work under it have a good moral compass and there are effective rules in place to prevent misuse. If you’re operating such a model already, then this most recent judgment means that it would be sensible to conduct a review to ensure that the description you give to the arrangement between the business and those providing services through it are legitimate.
If it’s something that you’re interesting in exploring however (whether that be as an operator of such a service, or as someone looking at providing their services under it), then this latest judgment doesn’t mean you should be put off – it just means you should enter into it with your eyes open and mindful that a clear ‘shot across the bows’ has been fired to the effect that a dim view will be taken of organisations looking to use such systems and as means of usurping employment protections of individuals and taking advantage of the vulnerable.