Globalisation is increasing changing the employment market with the ongoing rise of the gig economy. Certainly, working in the gig economy has become very attractive with workers looking for a lifestyle where, as self-employed workers, they can be their own boss. But, according to a recent employment tribunal decision, this is a misconception, as a court has found that gig economy employer, Uber, ‘directs and controls’ workers in the same way as a regular PAYE employer oversees its employees. Yet, the typical gig economy worker has even less employment rights than one working in a zero-hour contract.
Uber operates in a grey area
The dominant feature of the gig economy is that the companies who operate these business models state that the people who work for them are independent, self-employed workers with no employment rights. As a result, these companies don’t have to pay minimum wage, offer holidays, sick leave, pensions, or any of the other benefits that come from being a PAYE worker. Great for the business, but not always so great for those employed in Uber jobs, as they generally has to work excessively long hours for low rates of pay.
Indeed, rather than receiving any benefits, typically the arrangement is that the gig economy worker pays the facilitating business an agreed percentage of each transaction they carry out. This can be a significant sum over which the worker has no control. But the operator retains a lot of control of the worker through algorithms, such as customer reviews, task assignments and payment structures, so workers are incentivised to work how and when the platform dictates.
Millions of workers, just 16,000 employees
In the case of Uber, the firm has almost three million drivers in 600 cities worldwide, yet only employs 16,000 people. Everyone else is an independent contractor or ‘partner’. As a result, pressure has been mounting for legislators to review ‘worker’ and ‘employee’ classifications.
This all came to a head when two of Uber’s drivers, Mr Farrar and Mr Aslam, brought a case against Uber arguing that they were employed by Uber and should have rights and benefits as a result of that relationship. In defence, Uber argued that it was a technology company and not a taxi service provider and didn’t own a single taxi.
However, the tribunal said that once the Uber App was turned on by a driver, the relationship was one of employment. Employees had no control over what passengers they picked up, the fee charged and, indeed, did not collect any cash. That was all done by Uber. The drivers won. And the court decreed that Uber pay the drivers minimum wage, paid rest breaks and holiday pay.
Will more ‘real’ jobs be created?
Uber appealed but, in November 2017, lost their case against the decision. The company is set to appeal again, this time in the supreme courts, but in the meantime, has said it will provide limited insurance against sickness and injury, as well as nominal paternity/maternity benefits.
When Uber’s appeal reaches the supreme courts, the outcome of that could set a precedent for similar cases right across the gig economy. What happens then is anyone’s guess, but with Uber jobs in Manchester, jobs in London, jobs in Leeds, and jobs in Liverpool, as well as many other centres around the UK, there could be real shake-up coming in the gig economy.
Certainly, employers are going to be a lot more careful in future when it comes to self-employed and employee designations, which could mean more ‘real’ jobs with more employment rights coming online. If that happens, you can be sure to find them at Zoek UK.
Interested in finding out more about the subjects raised on this page?
Simply click on the tags below to read related blog posts...