The GIG Economy – Clarke Willmott LLP

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Bex Sinclair Head of the HR Consultancy Team at Clarke Willmott LLP discusses.

The gig economy is booming. If you haven’t heard about it or assume we’re talking festivals and live music, you may well have been hibernating for the last couple of years. With the rise of businesses like Uber, Deliveroo and Airbnb, an entire industry has developed before our eyes – otherwise known as the ‘gig’ industry, so called as individuals choose to make their living working gigs rather than being a slave to full time work. The digital world hasn’t just provided for individuals to become hoteliers and taxi drivers – over a million creative mini-entrepreneurs, now sell their home-made wares through the website Etsy.

In late 2016, the Office of National Statistics (ONS) published data that suggests 5.4 million workers are employed in the public sector, compared to 4.6 million workers operating on a self-employed basis. This figure seems set to rise. In terms of the worth of the gig economy, in the UK alone, it was estimated to be worth £0.5bn in 2014, and by 2025 the ONS forecasts the sector’s worth to hit £9bn. This explosion of small scale freelancing and entrepreneurship is clearly a powerful social trend.

However the growth of the gig economy has faced criticism, with claims that it is damaging traditional industries and stripping workers of their fundamental employment rights. Critics of the industry claim many of those on the periphery of the gig economy are effectively employees, who should be granted employment rights.

No definitive test can determine employment status. The factors to take into account have developed through case law. Late last year, Uber lost a high profile case to classify their workers as self-employed in a decision that could have far-reaching effects for the industry.

This has now been compounded by the ruling of the Court of Appeal in Pimlico Plumbers & Charlie Mullins v Gary Smith, which is likely to be a leading case on employment status in future years. In Pimlico, the court has ruled that self-employed plumbers providing their services to a plumbing company were in fact workers, not self-employed contractors.

This case provides useful guidance on the factors that may make an individual a ‘worker’ for employment law purposes, rather than a self-employed contractor. It highlights the importance of getting the paperwork right from the outset, but also that if what happens in reality is different from what is set out in any written agreement, the courts will rely on what happens in practice. The fact that the individual initially “agreed” that they were self-employed and were happy to work on that basis for many years, does not prevent them from bringing and succeeding with a claim to the contrary later down the line. This can lead to employers having to face expensive claims for back-pay (for example in relation to any unpaid holiday and sick pay) and in some circumstance will enable workers to bring successful discrimination claims. It may also encourage others within the business to follow suit.

Given the fast-changing nature of the industry, this is an area that we are increasingly evaluating on behalf of businesses . Companies that regularly use self-employed contractors but are unsure whether they are actually workers or employees, should as a minimum carry out an assessment of their current employment position.

E: bex.sinclair@clarkewillmott.com
T: 0345 209 1831

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With thanks to Clarke Willmott for their sponsorship of our Business Club in 2017.

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