Back to News

What is the so called gig economy?

Author: Sarah Naylor

The term “gig economy” is something we are seeing crop up a lot in the media at the moment. There have been several high profile employment law cases in recent months involving companies such as Uber, Deliveroo and Pimlico Plumbing. All of these cases refer to the so called “gig economy”, the employment rights that creates for a worker and how that affects them in reality.

It is interesting to consider whether people know what the term “gig economy” really means.

According to one definition “A gig economy is an environment in which temporary positions are common and organisations contract with independent workers for short-term engagements”.

Is the gig economy therefore a way for businesses to avoid complex and onerous employment laws? Or is it a better option for workers, a way of working designed to offer more flexibility with regard to hours of work and whether that worker is even required to work?

The most recent case addressing this very current issue was decided by the Court of Appeal in early February 2017. In the case of Pimlico Plumbers, a London business, it has been ruled that one of its workers was a worker entitled to basic employment rights which included holiday pay, rather than being an independent contractor, which is what Pimlico argued.

Previous high profile cases involving this point have included Uber and Deliveroo, and the outcome of the Pimlico case sets a current (for now!) precedent for millions of people employed in the gig economy at present. The case gives us strong indications about how the law views gig economy working arrangements and what rights those workers will have.

What are the benefits of working in a gig economy?

The core benefit has to be flexibility. For many people, it is a benefit to have flexible hours, control of how when and how much you work which enables people to juggle the other priorities they may have in their lives.

This flexibility also benefits the employer, as they only have to pay workers when they actually work and they do not incur staffing costs if the work is not there. It enables businesses to meet the supply and demand of industries where work may very much ebb and flow.

What is the downside?

One of the negatives is that workers are only paid for the hours they actually work – so income is not likely to be consistent. This can be difficult for workers who have regular outgoings to pay for such as rent or mortgage and bills.

The most contentious aspect and negative for workers is that they are classed as independent contractors rather than employees. This means that the workers do not gain the benefit of many employment rights such as protection from unfair dismissal, the right to redundancy payments, the right to national minimum wage, holiday pay or sickness pay.

Employee or independent contractor?

Businesses will undoubtedly seek to claim that workers in the gig economy are independent contractors as this frees a business from the shackles of employment laws and obligations to their workers. Whilst it may suit some workers to be classed as an independent contractor, many will wish to try and hold employment status due to the benefits and greater level of protection they gain from that.

The future?

It is estimated that currently around 5million people in the UK work within the gig economy and though more cases are emerging to give guidance on the status of workers in that industry, it still very much remains an uncertain time. The next case on the horizon will be the Uber appeal in the Court of Appeal – whether that decision mirrors that of Pimlico Plumbing or whether it seeks to establish different benchmarks for employment status, only time will tell.

 

 

Get in touch today