'Gig' economy: Latest developments

In a further challenge by a worker in the 'gig' economy, an Employment Tribunal has ruled that a cycle courier was a 'worker' and qualified for various employment protections. The Tribunal was not convinced by the contractual arrangements which positioned the courier as a self-employed operator and the courier company as their "customer".

What was the claim worth?

The cycle courier's claim was for just two days' paid holiday, but the ramifications are much wider. 'Workers' under UK law are a category that sits between 'employees' (who have the fullest protection under UK law) and 'contractors' (who have no right to benefits, although they are still protected against discrimination).  Although 'workers' do not have the protections against termination enjoyed by employees, they do have some valuable rights including the right to 28 days' paid holiday per year (pro-rated if working less than full time hours), the national minimum wage (currently £7.20 per hour, rising to £7.50 in April), sick pay and restrictions on the hours they work.  Given the number of individuals working in this way — the company in this case, CitySprint engages approximately 3,200 couriers in the UK — the ramifications for this business model are significant.   

'Worker' or contractor status — how do we know?

The Tribunals in these types of challenges are increasingly willing to disregard the terms of the contracts agreed between the parties. The courier in this case had signed a complex 'tender' document which described her as a contractor, effectively running her own courier business.

The Tribunal however placed more weight on the actual working arrangements, and in particular the control exercised over the individual. In this case, the individual underwent a training process, was expected to work the times allocated to her in the majority of cases or would not receive future work and had to follow high level instructions as to how she worked ('smile with your greeting').  The other key factor is whether the individual can genuinely send someone else in their place, or whether there is an obligation that they themselves do the work — what is known as 'personal service'. In this case, the contract gave the individual a right to provide a substitute, but the terms on which this could be done were so restrictive that, in reality, she could only exchange shifts with another existing worker at the same company. 

What next for the 'gig' economy?

This decision is another in a series of challenges by individuals working flexibly via new technology platforms, claiming protections as 'workers' or 'employees'. So far, private hire drivers and couriers have succeeded in challenges, with a number of other cases due to be heard this year. Although the UK has no concept of 'class actions', a Tribunal victory by one worker makes it easier for others working on the same basis to bring their own claims, or leverage these to negotiate more favourable terms of hire.

As we reported in our December update, the Government is undertaking a consultation into levels of protection for contractors and other casual workers in the 'gig economy'. We expect the findings to be published in the coming months, and the outcome may be legislation to create a specific legal framework for workers through new technology platforms, to give more certainty as to how they can agree genuinely "freelance" arrangements can be agreed. The European Union is currently considering a proposal from the French Government to this effect, as many European countries such as France and Spain have only a binary classification of employees (with very extensive protections) and contractors, which puts at risk the business model behind these new technology platforms.

We will continue to monitor developments in the UK and at European level and will issue further alerts in the coming months.

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