Who is a worker and who is self-employed in the 'gig economy'?
Updated: Oct 10, 2018
Many people now work in the 'gig economy' in the UK. The term generally describes a business model based on a flexible workforce – individuals are paid for each 'gig' or performance of a service that they provide (such as a courier delivery or taxi ride).
Employment laws give different rights and protections to individuals depending on their working status. The 3 main ways that staff can be employed are as:
Employees – working under an employment contract
Workers – working under a contract to provide services
A self-employed individual – working under a contract to provide services.
Some employment laws apply to all staff, some to employees only, and some to workers only. Basic workers' rights include the right to receive the national minimum wage, paid annual holiday and rest breaks, and the right to bring discrimination claims. Employees have more rights, including the right to paid maternity/adoption, paternity, parental and shared parental leave; protection from unfair dismissal; and the right to statutory redundancy pay.
Individuals in the gig economy are typically self-employed/freelance. They have less protection or rights under employment laws compared to workers and employees.
This can raise questions about whether a self-employed individual is genuinely self-employed or can be classed as a worker or employee, when considering their actual day-to-day working relationship (rather than just what their contract with an employer says).
Employment tribunals or courts will look at the actual working relationship based on the day-to-day workplace reality. Key factors that will be considered are how much control the employer has over the self-employed individual in their working arrangements. For example, can the self-employed person:
Control when and how they work
Turn down work when offered
Substitute someone else to do the work and not do the work personally?
A recent decision in the Court of Appeal (the highest court to consider such a case) held that a self-employed individual was "tightly controlled" and unable to work for anyone else. He was, therefore, classed as a worker and not as a self-employed contractor (but not as an employee). Decisions in similar disputes (involving Uber drivers, and courier companies) have also held that the self-employed individuals in those cases were workers and, therefore, entitled to workers' rights under employment law.
What this means for you
Recent rulings have sought to clarify the distinction between a self-employed contractor, a worker and an employee for employment rights purposes. Although each case depends on the particular workplace arrangements, these decisions could have a wider impact for the gig economy. If you use a similar business model, you're recommended to consider the reality of your working practices and be aware that you can't necessarily rely on what the contract says.
To discuss Gig Economy insurance or to obtain a quotation please contact us on 01273 789 979 or by email here.