Employment Status in the Gig Economy Global 2020 NRF Publication – UK

What is the state of law on the status of gig workers today?

Around five million people in the UK are employed in the gig economy, with the number of such workers having doubled between 2016 and 2019. This figure is expected to have increased in 2020 as unemployment has risen and more people turn to flexible work. While the gig economy provides the individuals with flexibility, it lacks job security and employment protection.  Establishing the nature of the employment relationship will determine the employment rights to which an individual is entitled.

In the UK there are three types of employment status for the purposes of determining employment rights: employees, workers and self-employed. Employees have greater employment rights and protections under English law than workers and self-employed contractors.

Case law in England and Wales has set out that in establishing employment status, courts, tribunals and HMRC will look at the substance of the relationship rather any labels that the parties have given to the relationship. The tribunal and court will consider a number of factors in determining employment status, including mutuality of obligation, personal service, and the level of control. Other factors are also considered such as restrictions on the individual working for other organisations; the pay and benefits made to the individual; integration into the company; the equipment provided; and the level of financial risk.

What are the grey areas in the law?

Much of the difficulty is that the tests for establishing employment status do not necessarily sit well with the new work environment. This distinction between worker and self-employed has evolved through case law and so making a determination will very much depend on the facts of each case. This leads to a lack of certainty.

The recent trend in the cases on the gig economy which have been heard by the courts is to find that the individuals are workers rather than self-employed, although it does depend on the facts of each case. The decisions have considered the degree of control that the business has over how the individual carries out the task, and that many of the individuals appear to be integrated into the business wearing a uniform and company branding. A couple of cases have indicated that the individuals are self-employed, looking at the fact that the individual in particular is able to provide a substitute and that the substitution clause is unfettered and genuine.

Cases are currently with the Supreme Court in the UK which are looking at the employment status  and also the freedom of courts to look behind the written agreement.

What legal developments are expected in the future?

In December 2018, the UK Government published its Good Work Plan which set out its vision for the future of the UK labour market. This included a proposal that the Government would introduce legislation “to improve the clarity of the employment status test”. Many are hoping that the judgement awaited from the Supreme Court may define some of these principals for the legislation. Another proposal was that workers should be able to request a more stable and predictable contract. It was suggested in December 2019 that this would be included in a new Employment Bill, but this has not yet been published.

The EU has published the EU Directive on transparent and predictable working conditions (Directive 2019/1152) and Member States have until August 1, 2022 to transpose the Directive into national law. Following the UK’s exit from the EU, it is not yet clear whether domestic legislation may be amended to incorporate the rights that will be available to EU workers.