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What could change for the gig economy and workers' rights?

With the UK General Election fast approaching, what could be on the horizon for workers' rights and the gig economy?

The gig economy is characterised by the prevalence of short-term contracts and freelance, "payment by the job" work as opposed to permanent jobs. With the emergence of the gig economy, employment status in the UK has come under intense scrutiny as businesses such as Uber, CitySprint and Pimlico Plumbers Ltd have discovered. The individuals involved in each of these cases have established that they are in fact workers rather than self-employed contractors.

Critics of the gig economy and zero-hour contracts point to exploitative practices and financial insecurity for individuals. Supporters, on the other hand, point to the flexibility and the abundance of opportunities which these models present in today's employment market. There will always be winners and losers in any economic model. Given recent case law developments and media attention, protecting workers rights and ensuring the gig economy is fair for all is high on the political agenda (see below).

Why is it so important?

Employment status in the UK determines which rights an individual is entitled to.

Workers have some limited rights including the right to minimum wage, paid annual leave and discrimination rights.

An employee is afforded the highest level of protection and rights in the UK including: unfair dismissal rights on obtaining qualifying service, right to statutory sick pay, as well as those rights enjoyed by workers.

Self-employed contractors have no such rights. The individual contractor bears the financial risk, can send a substitute in his/her place and operates as a business.

The emergence of the gig economy has blurred the line between these distinct categories, leading to confusion as to which is the correct categorisation for those within the gig economy. Guidance and reform may be on the way from the UK government. For the time-being, businesses and individuals will need to navigate this murky area under current case law. Whilst a contract is important for defining the relationship, an employment tribunal will look beyond this to determine what is actually happening in practice. So for businesses, it is important that the contract does in fact capture the true picture, in order to reduce the risk of litigation.

Taylor Report

The Taylor Report was commissioned by the Conservative government last October and is expected to be published in mid to late June this year.

There are indications from Matthew Taylor (who is leading the review) that recommendations may include:

A premium hourly rate above the minimum wage for those workers required to be on standby for work that may not materialise under zero hour contracts.

The "right to request" fixed hours. This would be similar to the right to request flexible working but would instead enable those on zero hour contracts to request fixed hours. This is a move which is supported by the Confederation of British Industry.

It is also anticipated that the report will express the view that some workers might be being exploited by businesses.

UK General Election

We anticipate that zero hour contracts and the 'gig economy' will remain on the agenda for the foreseeable future.  They have certainly featured in the manifestos of the main political parties in the UK as we approach the UK General Election on 8 June 2017.  With the contest for number 10 being between the Conservatives and Labour we have summarised their manifesto pledges for workers' rights and the gig economy.

Party

Manifesto pledges (a summary)

Conservatives

  • Continue to increase National Living Wage to 60 per cent of median earnings by 2020, and then by the rate of median earnings.
  • Await the Taylor Report recommendations and then ensure that the interests of employees, self-employed and those working in the 'gig economy' are protected.

Labour

  • Ban on zero hours contracts.
  • Raise the Minimum Wage to the Living Wage for all workers aged 18 or over.
  • Shift the burden of proof onto employers so that the law assumes the worker is an employee unless the employer can prove otherwise.
  • Impose fines on employers not meeting their responsibilities (within the gig economy).

It is clear from the above manifesto pledges that workers' rights and in particular the 'gig economy' are key issues in the current political debate, and so some level of reform will be on the agenda of the next UK government.

We will find out on the morning of 9 June 2017 which party will be forming the next UK government and leading the way in this key area.

For now we will have to await the much anticipated Taylor Report for indications of further developments. The report contains recommendations only, and so it will be for the next UK government to determine which recommendations it wishes to take forward. Progress is likely to be slow, as with any recommendations and reports, consultation with the public, and those impacted by the recommendations, will likely follow.

We also anticipate further developments in case law as Uber has appealed the Employment Tribunal decision, with the case due to be heard in September 2017.

TLT will keep you up to date with further insights on workers' rights and the gig economy as developments unfold, and will be one of the hot topics at our series of Annual Employment Update events in autumn 2017. 

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at May 2017. Specific advice should be sought for specific cases. For more information see our terms & conditions




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