Is new employment law really necessary to protect the gig workers?

Significant number of the self-employed are neither enjoying the advantages of self-employment nor benefiting from the rights associated with employment

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The Social Market Foundation (SMF), a think tank, has analysed data taken from 40,000 households and found that a significant number of the self-employed are neither enjoying the advantages of self-employment nor benefiting from the rights associated with employment. According to the research, 1 in 5 self-employed do not report a lot of autonomy over their job tasks and 1 in 3 self-employed do not report a lot of autonomy over working hours.

These statistics will ring a few alarm bells at a time when the government has asked Matthew Taylor, an ex head of the Number 10 policy Unit, to review employment law for the gig economy

Under current law it’s important to recognise that the amount of autonomy or control a person has over their work is relevant to their work status.

In the recent Uber case the employment tribunal found that two drivers were workers (rather than self-employed) and therefore entitled to the national minimum wage, paid rest breaks and holiday pay. For worker status, the individual must not be providing the work or services as a business, and control is a factor. In determining that that the drivers were not in business, the employment tribunal took into account the control Uber has over its drivers. In particular, the employment tribunal considered that Uber controls key information about passengers, sets routes and imposes numerous conditions on drivers. The employment tribunal gave short shrift to Uber’s contention that it just connects passengers with drivers. On the contrary Uber was held to be a transportation business and the drivers its workforce. 

So what’s the problem?  If individuals not in control of their work, like the Uber drivers, are deemed workers, isn’t the law just fine as it is? The answer is: it’s probably not fine. The Uber case was decided on its facts based on the Uber business model. Other

businesses operating within the gig economy will have different models. An employment tribunal could quite easily reach a different conclusion in another case. ‘Control’ is not an exact thing – and there will be grey areas. Also, for worker status the individual must be obliged to provide the work or services personally, rather than sending another person in their place.  While this requirement was met in the Uber case it will not always be met. Then there is the confusing discord between HMRC’s definition of self-employment and the Courts’ interpretation for determining work status and rights.

In its initial findings SMF has suggested two possible options to explore.

One change could be to reduce the financial incentive for firms to treat individuals as self-employed rather than employees. Employers currently have to pay national insurance contributions (separate from employee contributions) at a rate of 13.8% above £8,112 per year. The contributions payable by the self-employed are significantly less. Over time the level of contributions could be equalized, lessening the incentive for businesses to contract on self-employed terms.

Another option could be to give the low-paid automatic work rights and limit the option of self-employment to the higher-paid. The question of self-employment would therefore only arise for high-earners, who may be in a stronger bargaining position to ensure that whatever is negotiated truly reflects their working conditions. SMF recognises that there could be issues for start-up entrepreneurs, which would have to be addressed. There would be plenty of other matters to grapple with too including the definition of self-employed for these purposes, the threshold and the automatic work rights granted. Ed Vaizey, a senior Conservative MP, for example, has called for self-employed workers in the gig economy to be guaranteed the legal minimum wage.

One of the main challenges SMF had in making its analysis and reaching conclusions was obtaining enough relevant credible data. There was a lack of data about how companies are seeking to engage workers, how workers want to be engaged and whether or not they are seeking improved rights and protections. To this end, SMF will be carrying out a survey to help gain a greater understanding of the key issues. 

It’s a complex puzzle. 

Matt Gingell is a partner at Gannons Solicitors, and specialises in employment law.  Read all of his articles at www.mattgingell.com

 

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