EMPLOYMENT LAW
Why local employers must be in tune with the ‘ gig economy ’
With a Government review into employment practices in the modern economy set to be published this summer , Rosemary Lundy , Partner and Head of Employment Law at leading law firm Arthur Cox , outlines the challenges for employment law in keeping pace with new business models that have emerged as part of the ‘ gig economy ’.
he ‘ gig economy ’ is a phrase that has assumed residence in our business
Tvernacular recently , as companies with disruptive business models such as Uber and Pimlico Plumbers continue to grow .
Essentially , the gig economy is a blanket term for a labour market characterised by the prevalence of shortterm contracts or freelance work , as opposed to permanent jobs .
As the rising number of employment disputes playing out in the Court of Appeal recently testifies , securing legal clarity on the range of employees ’ rights and employers ’ responsibilities that are inherent in the gig economy has proven difficult .
Freelance Contractors
Employers that rely on the use of freelance contractors to deliver services such as food deliveries , couriers , taxis and plumbers have faced legal challenges which fundamentally undermine their gig economy business model .
This model relies on technologies connecting clients with freelance service providers online , where the freelancers are paid ‘ by the gig ’.
Many of the employment disputes which have arisen focus on the three categories of employment status involved , and the rights to which each is entitled .
These categories are employees ( who work under employment contracts and are subject to a substantial degree of control by their employer ), selfemployed ( who carry on a profession or business on their own account , are subject to a different tax regime and are responsible for paying their own tax ) and workers ( who are entitled to some , but not all , of the protections offered by UK employment law ).
It has been claimed that current methods of categorising workers are creaking under the weight of a changing economy and need to be revisited , with gig economy businesses insisting they are not employers , but simply the hosts of a technology platform that connects service providers with the end user .
Legal Challenges
The Government ’ s reaction to the emergence of the gig economy and its attendant legal challenges has been interesting , with Matthew Taylor , a former political strategist , having been appointed by the Prime Minster to lead a review of employment practices in the modern economy .
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Among the issues the review has been asked to consider is whether current definitions of employment status ‘ need to be updated to reflect new forms of working created by emerging business models , such as ondemand platforms ’.
Meanwhile , in a report published on 1st May 2017 , the Work and Pensions Committee , which considered the effects of the gig economy on the welfare system and the social and economic position of workers , concluded that the Government must stop ‘ bogus ’ selfemployment practices that are potentially creating an extra burden on the welfare state while also reducing tax contributions .
The report stated that , despite contributing less , the selfemployed receive almost equal access to services funded by National Insurance as employees , and therefore recommended that employee and selfemployed National Insurance contributions should be equalised .
The review of employment practices being led by Matthew Taylor is due to be published this summer . Until then , it is imperative that employers are aware that individuals who are deemed to be workers will be entitled to rights , including minimum paid leave , rest breaks , and the national minimum wage .
Trade Unions are taking an active interest in gig economy business models and the Government scrutiny of them is likely to intensify , meaning employers must ensure they receive the best advice possible as to their legal responsibilities .
MOREINFORMATION
The Employment Law team at Arthur Cox is well positioned to advise on all aspects of employment law in Northern Ireland .
Please call + 44 28 9023 0007 for further information from Rosemary or your regular Arthur Cox contact .