The Gig Economy: a cause for concern for employers?


Speed Read

Last month, two Uber drivers in London won their test cases before the UK Employment Tribunal (the ET). The ET held that they were "workers" and not self-employed individuals. The significance of this finding is that as "workers" they are entitled to certain minimum statutory protections. The key factors on which the ET based its decision are:

  • The contractual terms between Uber and its drivers do not reflect the reality of the arrangement;
     
  • The level of control that Uber exerts over its drivers throughout various aspects of the relationship; and
     
  • The fact that most drivers exclusively work for Uber and not any other part of the transport industry.

Uber is appealing the decision so it will not take effect pending the outcome of the appeal. If the appeal by Uber fails and the decision regarding their status is upheld, then this could encourage similar claims by workers based in Ireland and who are engaged by businesses operating an Uber style model.

What is the Gig Economy?

  • It refers to that section of the economy in which individuals are engaged on an ad hoc basis for "gig" businesses. Sometimes referred to as "giggers" they usually work for app-based digital platforms which provide consumers with 'on demand' services, such as taxi journeys, cleaning services or high end food delivery.
     
  • The giggers make themselves available to provide the relevant service on an ad hoc basis in return for a fee which is split between the person who performs the service and the company. Tech companies such as Uber, Deliveroo, Airbnb and Handy (co-founded by Irishman Oisin Hanrahan), are revolutionising the service industry, providing consumers with instant access to lower cost on demand facilities at the swipe of a screen.
     
  • The appeal of the shared or 'peer' approach allows companies to keep their base costs low and call upon its individual service providers as and when required on an ad hoc basis. Initially, advocates for the 'gig economy' promoted it as a mechanism for the people providing the services to top up their normal income with the surplus cash earned through the relevant app on their smartphone, on their own timetable. Giggers were perceived as people who are working more flexibly and remotely, through a multiplicity of remuneration and employment structures. However, this has brought challenges to those businesses as increasingly there has been media focus on the "employment conditions" of giggers and high profile appeals for the protection of those working in the gig economy.

So what happened in the Uber case?

  • On 28 October 2016, two Uber drivers (or "riders" as they are known) succeeded with their test claims against Uber in which they disputed their status of independent contractors.
     
  • The ET held that the "riders" are not self-employed (as Uber argued), rather that they come within the definition of a "worker" under UK law.
     
  • The ET were most influenced in their view by the following:
    • The contractual terms between Uber and its drivers do not reflect the practical reality of the arrangement;
       
    • The control that Uber exerts over its driver throughout the relationship, including the setting of default routes, the operation of a rating system which acts as a method of performance management and the fact that Uber accepts all of the risks of loss associated with the drivers; and
       
    • The drivers are not marketed to the general transport industry – they are recruited by Uber to "work as integral components of its organisation".
       
    • The ET was particularly critical of the "twisted" language used in Uber's documentation, which it said the ET was free to disregard. The ET referred to the unequal bargaining positions of the parties and the fact that the documentation misrepresented the rights and obligations of both sides.

So, what is the significance of the decision?

  • This means that the "workers" are entitled to receive certain benefits such as statutory minimum wage, statutory rest periods and statutory holiday pay.

So what impact does this have in Ireland?

  • None at the moment. The decision is a decision of the ET in the UK and it is under appeal. It is not binding in Ireland.
     
  • Also, in Ireland, we do not have the equivalent "worker" status as applies in the UK. In Ireland, either you are an employee or you are not – there is no middle ground "worker" status in this context so the ET decision does not fit squarely into Irish law concepts.  
     
  • Having said that however, while we have plenty of caselaw which clarify the markers or characteristics of an employment relationship versus a non-employment relationship, so far neither the Workplace Relations Commission or the civil courts have seen a legal challenge in Ireland to the gig economy model. The trade unions have been vocal on this point for quite some time so it is clear that any decision by the UK Employment Appeal Tribunal will be closely watched for those considering filing a test case in Ireland.
     
  • It could lead to further industrial unrest – something that has been a feature of our labour market in 2016. On Tuesday 22 November 2016, more than one hundred Uber drivers participated in a "go-slow" protest in central London in an attempt to put pressure on the Mayor of London to guarantee that Uber will pay its UK riders the minimum wage.
     
  • The businesses are pushing back though. Uber has appealed and just this week, Deliveroo rejected the Independent Workers Union of Great Britain (the IWUGB)'s call for a "voluntary recognition agreement" that would require start-ups in Britain to negotiate worker conditions with trade union representatives. The IWUGB are also backing four cases in the Employment Tribunal which are being taken by bicycle couriers against their respective courier companies, the first of which kicked off in the UK on Tuesday 22 November.

Anything we can do while we wait for the decision?

  • Be aware that no matter what label you put on the business/contractor relationship, the reality of the relationship will be examined beyond what is included in the written terms and conditions of employment.
     
  • It is important to effectively manage and monitor employee/contractor relationships throughout the term of that relationship to ensure those relationships are what the business intends them to be.
     
  • Be mindful that any low cost, low commitment arrangement with an individual who is providing exclusive services for a company may attach additional obligations. Watch this space!

Please contact Ciara McLoughlin or Rachael Evans or your usual A&L Goodbody Employment Team.

Date Published: 28 November 2016