The online food delivery company Deliveroo has called on the government to create a ‘charter’ that would give it more clarity about what rights it could offer contractors without risking their employment status. The start-up wants clear guidance from the government about the security it can offer to its riders without the risk of them becoming full time employees.
Deliveroo and other companies that use ‘gig economy’ workers are finding themselves repeatedly facing costly litigation over workers’ status.
Gig economy workers
The gig economy encompasses a variety of forms of working, such as platform, on-demand, online economy and collaborative economy. The gig economy is commonly associated with the tech industry but is also found in other sectors that rely on individuals who work in this flexible way. Previously, companies would have relied on bank staff, seasonal workers and individuals on contracts such as zero hours or short term. Such staff were often termed ‘casual workers’ and were generally entitled to a baseline of employment protection, such as the national minimum wage, paid holidays, rest periods and other working time protections, protection against detriments for whistleblowing etc.
Gig economy workers, however, are treated as self-employed contractors who are free to accept or reject work. The reality is that the situation is not so clear-cut.
If you intend someone worker for you to be genuinely self-employed, they must fall outside of the definitions of ‘employee’ and ‘worker’ as set out in statute and case law. It is usually reasonably straightforward to distinguish between an employee and a self-employed contractor (although there is still plenty of litigation over this point) but it is certainly more complicated to establish whether an individual is a worker or genuinely self-employed. Indeed, your ‘worker’ may genuinely be classified as self-employed for tax purposes but be a worker for employment law purposes. The starting point for determining status is the Employment Rights Act 1996 (ERA) but the analysis is fact-dependent. Recently, tribunals have tended to find that individuals working in the gig economy as self-employed contractors are in fact workers. Where you have set the terms of the contract, pay and exercise a significant degree of control including over how and when the individual works, then the outcome is likely to be that the individual is a worker.
5 questions to ask to determine whether an individual is a worker or is self-employed
- Does the individual’s working arrangements meet the definition of worker in section 203(3) ERA 1996?
- Is there personal service? Are they contractually obliged to supply that service?
- Can the individual supply a substitute to do their work?
- Is the individual integrated into the organisation? Do they wear a company uniform?
- Does the individual have control over how and when they work?