The turbulence of employment status in the gig economy

Charlotte Allery, employment solicitor in the tech sector at law firm Coffin Mew runs through the impact of recent cases on employment status in the age of the gig economy

According to government research released in February this year, 4.4 per cent of the population worked in the gig economy in the previous 12 months, equating to a whopping 2.8 million people.

Together with the numerous high-profile employment status cases against large digital platform companies, such as Uber and Deliveroo, the issue of employment status in the gig economy is crying out for government intervention and clarification.

But before then, what do businesses need to consider when deciding the employment status of their workforce, and what have the recent cases taught us when making this determination? Looking forward, what should the government be doing to resolve this area of confusion for all parties?

Determining the employment status of a ‘gig' worker
Currently, the law recognises that there are three categories of individuals providing services - employees, workers and the self-employed.

Employment status is significant for determining an individual's legal rights and protections, as well as their tax treatment. Employees have many rights, including protection from unfair dismissal and entitlement to notice, whilst the genuinely self-employed have very few. Workers fall somewhere in the middle, qualifying for the National Minimum Wage, rest breaks and paid annual leave, for example.

Due to the fundamental differences of protection for each category, the question of employment status is crucial. However, unhelpfully for businesses and individuals alike, there is no single or quick-fire test to determine employment status. As well-established case law has shown us, you need to look at the reality of the relationship in the round, not just the paperwork between the parties, and consider a range of factors before making a judgment.

No one factor is decisive, but the central considerations focus on mutuality of obligation, being the ongoing obligation on the business to offer work and on the individual to accept it, the requirement of personal service (i.e. does the individual have to perform the services personally or do they have a genuine ability to provide a substitute to work in their place?), and whether the individual is subject to supervision, direction or control.

If these three key factors are present, the pendulum swings toward the individual being an employee, and if just mutuality of obligation is missing (i.e. the parties work on an ‘as and when' basis), the individual is likely to be a worker. In contrast, the genuinely self-employed will be in business on their account, with flexibility on how and when they provide their services.

What have the recent cases shown us?
It has been very hard to miss the well-publicised barrage of employment status cases in the gig economy working their way through the courts and tribunals over the past couple of years. Whilst employment status cases are not a new concept, gig economy businesses, particularly those operating via digital platforms, have been hit by this surge of litigation.

It is always worth taking each judgment with a small pinch of salt, as cases on status are heavily fact dependent. However, Uber, Deliveroo, CitySprint, Addison Lee and Hermes have all come under scrutiny for their working practices and, with limited exceptions, they have been on the losing side of arguments about the employment status of their workforce.

In the case of Uber v Aslam, the Employment Appeal Tribunal (EAT) rejected Uber's argument that it was simply a technology platform putting drivers in touch with passengers, finding that the drivers were engaged as workers whenever they were signed into the Uber app and ready and willing to accept bookings.

Unfortunately for Addison Lee, the tribunals determined that both its cycle couriers and taxi drivers were workers, commenting that in both cases the contract did not reflect the true reality of the relationship. For Addison Lee's taxi drivers, the tribunal focused on the fact that there was an expectation on both sides that, if given a job, a driver would do it. In fact, there was no ‘decline' button on the digital system and, if the driver did not accept a job, they would be placed under ‘gentle pressure' to complete the job.

In the cases concerning CitySprint and Hermes, the decisions followed suit. CitySprint's courier was a worker and subject to a level of control, with little autonomy, being told to log into a company tracking system, wear a uniform, smile when providing the service and follow the direction of a controller.

Interestingly, even though Hermes' couriers had the right to find a cover or a substitution for their services, as Hermes retained the right to veto the courier's choice of replacement, it was clear that personal service was a dominant feature of the arrangement. In addition, the tribunal concluded that the Hermes couriers did not negotiate their pay rates, tipping the balance further towards worker status.

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The turbulence of employment status in the gig economy

Charlotte Allery, employment solicitor in the tech sector at law firm Coffin Mew runs through the impact of recent cases on employment status in the age of the gig economy

With an exception to this theme, in a recent claim against Deliveroo, Deliveroo's riders were found to be genuinely self-employed. This was because they had an ‘almost unfettered right of substitution', with no requirement on the riders to even inform Deliveroo if they had asked someone else to work in their place.

What's next for this turbulent area of law?
Looking at the case law, the end is not yet in sight. Uber have appealed the decision of the EAT, with their appeal expected to be heard in the Court of Appeal in October this year. Deliveroo are not out of the woods yet either, as the applicable trade union, the IWGB, has been granted a limited right to seek judicial review of the decision on human rights grounds.

Turning away from the courts and tribunals, in July last year, the government published the Taylor review into modern working practices, which was launched as an independent analysis into the rise of atypical working. The review made various proposals, including the introduction of a new category of status known as ‘dependent contractor'. However, the sceptics amongst us would say that, whilst this may sound like a fourth limb to status, it is akin to ‘worker' and unlikely to change much except for the vernacular.

The government's response to the Taylor review involved a consultation on employment status, which acknowledged that the current framework for determining whether someone is self-employed, employed or a worker fails to provide the clarity and certainty businesses and individuals need.

The consultation sought views on a range of proposals to demystify the rules and avoid unscrupulous employers and individuals gaming the system. Specifically, the consultation asked whether codification of the current case law would bring greater clarity and certainty, and queried how the detail of the employment status tests may need to be updated to reflect modern working relationships.

Whilst reviews and consultations are helpful to raise awareness and tease out the issue, action is required. Ultimately, further legislation appears to be the only option for giving all parties the legal certainty required. The consultation closed in June, with feedback currently being analysed, so it is now a case of watch this space.

Charlotte Allery, employment solicitor in the tech sector at law firm Coffin Mew

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