The gig economy and how it affects employers

A few days before the Taylor Review was unveiled, one of the biggest players in ‘the gig economy’, Deliveroo, made headlines by calling for changes to the law on flexible employment practices.The development would allow what Deliveroo called its ‘independent contractors’ to enjoy increased benefits while retaining their treasured ability to work when they wanted to.

The move might have been good PR, an attempt to steal the Review’s thunder or a genuine desire for a better deal for delivery drives, couriers and cabbies. Whatever the reason, it heralded change in those working environments where temporary positions are the norm and organisations contract with ‘independent workers’ for flexible engagements with no security or protection - the so called ‘gig economy’.How far and how fast this goes will depend on the government’s reaction to the Taylor Review and similar reports and Theresa May has said she will look at its proposals “very carefully and seriously.”

The Review’s recommendations are certainly a step in the right direction. While the report makes the point that flexibility is a good thing, Taylor seeks to end arrangements that many claim allow companies to reap great benefits while workers carry the risks.

Gig economy ‘platform’ organisations are not obliged to provide work – and when they do, the worker must supply their own vehicle or tools, have business insurance and pay their own tax and NIC. Should they be injured or unable to work because of illness, the platform provider does not have to support them financially.

Taylor proposes renaming the current category of ‘worker’ (people who are not employed but are obliged to do the work personally) to a ‘dependant contractor’, entitled to important rights such as sick pay in addition to minimum wage and paid holidays.

The move is bolstered by the recommendation of a clear definition for dependant contractors that will easily differentiate them from the genuinely self-employed. This will enable them to know where they stand and what their rights are, instead of assuming that they are self-employed, just because they are labelled as such by the platform provider, when in fact they are not. At present, they would have to apply to a Tribunal to establish their status, a costly and stressful exercise.Taylor recommends a quicker, more cost effective route through Tribunal to determine the status, without the worker having to pay the fees.

The Review also thinks ‘good work’ for all is ethical, leading to best personal outcomes and raised productivity. Here a social contract with people is envisaged that includes dignity at work, adequate pay, the right amount of work (within reason) and the realistic prospect of career progression.Specific recommendations are regular assignments rather than zero hours, where nobody is forced to work more than 40 hours a week or to manage on less than 30 hours – ensuring they are neither exhausted nor financially insecure.

All this is very realistic and achievable without heavy administrative burdens or costly re-gearing of HR procedures. After some initial work, preparing clear contract documents, it could well make the personnel function easier and more streamlined, as unambiguous employment status documents will reduce confusion, uncertainty and disputes. This will allow workers and managers alike to get on with their ‘real’ jobs, with the relationship governed by ‘correct’ contracts that accurately describe the relationship in much the same way as contracts of employment do now.

The existing legally defined ‘worker’ status that figures in many current flexible employment arrangements will be familiar to many managers and HR professionals. The people in the category are already entitled to a range of benefits, including national minimum wage and holiday entitlement, so the change will not be massive. It’s about recognising which people have the status.

However, the Taylor Review has been badged ‘feeble’ by critics and while I don’t want to enter a political debate, it is true that the recommended changes aren’t hugely significant. Many will be disappointed that there is no proposal to abolish Employment Tribunal fees, seen as a barrier to justice for those who provide their skills, time and energy, whatever their employment status. In addition, no significant penalty for employers who break the new rules is suggested.

While none of the report’s proposals have been publicly endorsed yet and no timetable has been set, some of the changes will undoubtedly be ratified. We may also see the government going further than the Review’s suggestions by ushering in additional far-reaching reforms.So how should companies, which include those who hire drivers and couriers, prepare for the probable enhanced protection for gig economy workers – and how will they know if they are likely to be affected?

A good idea is to examine current hiring arrangements to determine whether those who provide services are employees, workers or self-employed. This will inform organisations whether they are complying with existing law and allow them to reduce future backdated awards if not.It will also be a good yardstick to assess whether upcoming changes along the lines of the Taylor Review will apply to them and the likely scope and scale of their future responsibilities and liabilities.

Consulting a legal practice with an acknowledged expertise in employment law will ensure certainty here. Regular reviews with independent professionals will also help companies stay abreast of developments, prepare for any upcoming changes and avoid doubt and dispute.

Author Bio:
Barry Warne heads the employment team at hlw Keeble Hawson, of Sheffield, Leeds and Doncaster. Among his areas of specialism are TUPE, Employment Tribunal advocacy and Executive Severances