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Law for Business

Knowhow - guidance - precedents

31 MAY 2017

Move over and make way for the “Gig Economy”

Move over and make way for the “Gig Economy”
There’s a new kid on the block - the “Gig Economy” – shaking up the way in which people work, undermining the long standing view of the need to work for a single employer and creating both opportunities and challenges. It’s a labour market characterised by the prevalence of short term contracts or freelance work as opposed to permanent jobs, where the worker gets paid per “gig” they undertake, be that a delivery, a repair or a set piece of work. The desire for flexible working, work-life balance and greater independence of choice is challenging the traditional model of working every day in one job or for one employer. But this is not just the existing concept of freelancing or consultancy, and it’s not zero hours contracts (where the person is still an employee with rights albeit without guaranteed hours); this is wider spread independent contractors across all services and increasingly other industries. Enter the “Gig Economy” where, with the aid of technology, a person can work for a number of employers or work providers at the same time, choosing which “gigs” they take on, when and for whom and for how long.

But is this limited to just technology driven jobs and roles? In fact it can apply to any work or service which requires people. Cleaners and private tutors may have been the traditional services operating on a similar multi-employer basis, but now the range of services offered in this way is unlimited as people can be contacted so easily, and instructions, arrangements and work output communicated electronically.

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The model operates as a pool of resources, workers who are on standby and willing to work, available to be called upon by an engager/employer who needs resources, but without the need for a third party agency to source or regulate. Immediately the advantage of flexibility is apparent – the engager only engages the resources needed from time to time; the worker choses when and to whom he or she make themselves available, organising paid work around care responsibilities or other work/interests. But the downside is lack of certainty on both sides – the engager may not be able to engage enough or appropriate resources at the right time, whilst for the worker, there may not be regularity or security of work. But are both these concepts outdated?

Technology and flexibility is changing the way in which many businesses operate and what people want to do. McKinsey’s recent study across Europe and the US and found that 162 million people were engaged in different sorts of independent work – or 20-30% of the working age population. More interestingly it also reported that 70% chose to work in this way, indicating a strong actual or perceived advantage to the flexibility offered. Recent figures for the UK alone put the number of UK workers operating in the “gig economy” at round 5 million. The cynics might say this is exploitation with little work place protection; however there is a growing number of people prepared to try this in return for the flexibility afforded.

With any new model come questions on how it will operate and how to protect both parties. Immediately the question of workers’ rights springs to mind and the Courts have been considering this with the recent cases concerning Uber drivers (Oct 2016), City Sprint couriers (Jan 2017), Pimlico plumbers (Feb 2017) and Deliveroo food deliverers, finding that they were all “workers” with legal rights rather than self-employed contractors. These legal rights mean that they are entitled to basic workers’ rights, including holiday pay, sick pay and minimum wage.

Clearly exploitation should not be condoned, but likewise protection of those engaging members of the Gig economy should not be overlooked. The need to ensure protection of trade secrets, certainty of commitment of labour and transparency of obligations also need to be addressed.

Whilst the Courts grapple with interpretation of working status, the election manifestos recognise the uncertainty and the Unions consider the engager to be “hiding behind a façade of technological ingenuity … to avoid providing [workers] with the most basic of employment rights” (Secretary of IWGB), the Government has commissioned a review into a range of working practices with the view to ensuring employment rules reflect the new ways of working and keep pace with the changing economy. Hopefully this will give some certainty to both sides whilst still enabling alternative methods of working to flourish.

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