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.
18 www. businessfirstonline. co. uk
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.