The ‘gig economy’. What do you need to know?

According to statistics, the so-called ‘gig economy’ now accounts for up to 5 million workers in the UK including Stockport. The concept of workers’ services being utilised on a contractual basis is nothing new. So why has this manner of working become so controversial in recent months?

The main reason is due to two Employment Tribunal cases involving high profile companies regularly utilising the services of ‘gig workers’ – Uber and City Sprint. In both cases, the individuals bringing claims purported that the demands being placed upon them by the respective companies they ‘contracted’ for made their employment status closer to that of ‘worker’ than ‘contractor’. Both Tribunals ruled in favour of the ‘workers’; although the Uber case was swiftly taken to appeal.

But why does it matter?

In the eyes of the law, particularly employment law, the distinction between the status of a contractor and a worker is actually a significant one. Whereas ‘contractors’ are viewed as independent people, therefore responsible for their own conditions of work and costs of obtaining and performing that work, ‘workers’ are afforded more rights; such as entitlement to paid holiday, the national minimum wage and potentially sick pay.

Although seemingly straightforward a distinction, problems arise when contractors feel they are being unfairly taken advantage of.  Both the Uber and City Sprint cases came about due to workers feeling aggrieved about pay; the contractors claiming that they were not achieving national minimum wage once other costs of doing their work, such as maintaining a vehicle, sick or holiday pay and admin expenses, were taken into account.

So what should employers do to protect themselves against claims?

Ensuring a fair rate of pay across the use of casual or ‘gig’ workers is key. Employers should consider not only the hours undertaken in the workplace, but also the time that is required outside of this yet still linked to the contract at hand (administrative time, travel costs etc.)

Businesses utilising contractors must also be mindful of the true manner in which the individual(s) work in practice and not solely rely on having a worker signed up to a particular type of ‘contract’ (eg. a consultancy or contractor agreement). If called into question, a Tribunal will look beyond the contract you have in place; looking instead at day to day tasks and responsibilities to determine a worker’s true employment status.

What next?

In recognition of the problems associated with casual contractual work and the growing pace at which people appear to be choosing this type of work over traditional employment, the government launched a consultation into the area late last year. It is anticipated that the consultation will bring legislative changes for businesses in relation to how they utilise the services of contractors and other casual employees; something we will be sure to keep you abreast of as and when any changes are announced.

For further advice in relation to employing workers across all statuses, from traditional ‘employees’ to contracted individuals, please contact either: Pam McColl or Amanda Isherwood or call us on 0161 312 1864. We are situated in Bramhall, Stockport, Cheshire and are happy to give employment advice to Greater Manchester employees and employers, including Cheadle Hulme, Poynton, Hazel Grove, and others.