Employment Law vs The Gig Economy: Is Uber Doomed?


HR Insights for ProfessionalsThe latest thought leadership for HR pros

Tuesday, April 11, 2017

Recent court cases have highlighted cracks in the so-called "gig economy". But does this mean the end, or just an evolution of this new form of self-employment?

Article 2 Minutes
Employment Law vs The Gig Economy: Is Uber Doomed?

Traditionally, UK employees have either been classed as workers or self-employed. The former entitles people to benefits like a minimum wage, paid holiday and maternity leave, while the latter gives autonomy and control over what work is taken on and how much to charge. However, recently these lines have become blurred due to the emergence of the 'gig economy'.

What's changed?

This is epitomized by companies such as Uber or Deliveroo, who present themselves as platforms through which self-employed taxi drivers and food couriers, respectively, can find work. However, a recent ruling has poked holes in this theory.

An employment tribunal found that Uber drivers aren't self-employed, but are in fact workers. This means that Uber now has to provide its 40,000 drivers with sick pay, holiday pay and other benefits. So does this mean that the gig economy is no more?

Frank Ryan, director of employment lawyers Vardags, said: "This is essentially a green light for others in the gig economy to come forward and make similar claims." This means that it will be harder for companies like Uber to keep their business model. However, it does not necessarily mean the end of the gig economy.

What happened?

The court case was based on the element of control Uber drivers have over how they complete their work. Matt Gingell, a partner specializing in employment law at Gannons Solicitors, points out that other companies might allow self-employed workers more control over their work, allowing them to keep a similar business model.

For example, a company similar to Uber that allowed drivers to choose their routes, gave them more control over key passenger information and generally enabled them to have more choice might not have fallen foul of the same verdict at an employment tribunal.

The future of the gig economy

The other option is for these businesses to accept that their workers are not self-employed and provide them with the benefits they are entitled to. This is the preferred option of Theo Nicou, an employment solicitor at Slater and Gordon Lawyers, who wrote: "Individuals who are central to delivery of an organization’s business should be given the basic and important rights to which they are entitled without the need for an employment tribunal judge to intervene."

Overall, it is clear that the gig economy is not going anywhere. It is convenient for consumers and for many workers. However, some changes definitely need to be made if it is going to be fit for purpose in the coming years.

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