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Is the gig up for the gig economy?

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The gig economy continues to be a hot topic for discussion as the UK works on its position on fair work. Dan Cave uncovers the current climate and explores the alternatives.

Spend time in any UK city or town and it’s almost impossible not to spot the gig economy in action.

Hurried-looking individuals in bright orange delivery jackets, blue waterproofs, and bold purple uniforms slalom along roads on e-bikes, bicycles and scooters or throng at fast-food counters.

Their counterparts deliver parcels in the areas we live in or ferry passengers around in taxis.

Though this gig style of work – usually involving an individual getting remunerated for a task initiated via a digital platform; the most common kinds being courier, delivery and taxi work – is widespread, it’s also growing and can be found in many sectors and across the pay scale.

Notwithstanding that 4.4 million people already ‘gig’ weekly, a figure which tripled from 2016 to 2021 according to Trades Union Congress (TUC) figures. The Covid period only added to the gig economy’s swelling ranks.

“As many lost more traditional jobs during the pandemic they turned to [gigging] to fill the gaps,” adds Gabriel Morrison, a senior employment solicitor at gig economy specialists Leigh Day.

Here, CIPD research found individuals turn to gig work primarily to boost their income and to allay fears about finding regular pay, with few regarding it as their main employment.

The CIPD also found that more than 50% of gig workers are satisfied with their earnings, a figure higher than those in full-time employment.

“Contingent labour is hugely beneficial to organisations. It gives them flexibility compared with the very high-cost base of employees on a full-time basis,” explains Sam Smith, EMEA president at Magnit.

But despite gig work’s apparent growth in popularity among the workforce and businesses, its rise has not come without controversy or challenge.

Indeed, not discounting consumer demand – according to 2023 UK Statista data almost 13 million of us currently use platform delivery apps for food – as the gig economy has grown so have reports, and attention, on the poor working conditions of those who labour within it.

There has also been increased focus on the employment frameworks gig economy platform employers utilise with a growth of litigation and, in recent years, burgeoning union activity, as well as some government intervention and guidance.

With the European Union set to change its gig economy rules, UK HR functions might start interrogating whether their position needs updating and how they should advise their organisations on the ethical, legal and commercial implications of engaging in it.

 

Insecurity and confusion

For starters, when it comes to individual working conditions the gig economy is widely considered to be poor – although some benefits do exist.

In fact, while a 2023 study by the University of Bristol found that over half (52%) of gig workers don’t get minimum wage, many are happy with their remuneration.

Elsewhere, many gigging individuals feel empowered, entrepreneurial and report being able to balance work alongside other responsibilities, such as care.

As an app often guides work, gigging individuals don’t need English language skills or a professional network, which means migrants can access work.

“It can provide earning opportunities for people who are otherwise marginalised,” explains Alex Wood, senior lecturer at the University of Bristol Business School.

However, the university’s study also found that 75% of gig workers suffer from work-related insecurity and anxiety, while the CIPD found that 60% of individuals feel they don’t get enough work while gigging.

Contrasted with the £25 billion in global revenue gig economy giant Uber made in 2022, there is something of an imbalance. “On the business side, you’re only ever paying for the engagement; you can reduce your costs,” says Wood.

For Adam Badger, a researcher at the Fairwork project, such conditions raise questions for gig employers as to whether their practices are exploitative.

“Even for those that the labour market fails to provide for traditionally and enjoy the flexibility, they are underpaid, overstressed and overworked,” he says.

And despite reports of initial high earnings from gig work in the early 2010s, there are concerns that gig work conditions are also getting worse.

Earlier this year, Just Eat announced it was going to cut the employment rights of its couriers while The Bureau of Investigative Journalism found that some Deliveroo riders made only £2 per hour in 2021.

A recent surge in e-bike bedsit fires in London was linked in an Evening Standard article to gig economy labour.

“It’s incredibly dangerous work,” says Wood, adding that algorithmic management can also hurt individuals’ chances of getting, or continuing to get, adequate work, often played out along racialised or gendered lines.

“In addition, individuals are driven to work fast by algorithms or they wake up one day and all the algorithms have changed,” Wood continues.

As a result of gig economy developments Fairwork annually ranks the biggest gig economy employers in areas including pay, conditions, contracts, management, and representation.

Publicly available, it puts well-known names at the bottom of its rankings (Uber Eats, Bolt and Task Rabbit) while others (Pedal Me and Getir) score well for having clear terms and conditions and for good management processes.

For those who worry about their employer and consumer brand, it’s something to be aware of.

 

“It’s incredibly dangerous work”

 

One of Fairwork’s ranking scores regards clarity around terms of engagement. It’s one of the areas that Acas sees the most queries about.

John Palmer, an advisor at Acas, explains that the biggest query area the services see regards employment status, with other inquiries from those wanting clarity over rights to paid leave and others who worry about the imbalance between themselves and their employer.

“The over-use of these [gig] arrangements might result in an employer being seen as an unattractive place to work,” he says.

And while this lack of clarity might not stop many from accessing work on these platforms – according to Deliveroo, 10,000 people apply to be a rider every week – Julia Kermode, founder at Iwork, a support network for all contingent workers, says that it might create further confusion for those who are told they are contractually self-employed but want employment rights.

“They don’t know what they might be entitled to do,” she says.

 

Employment status

Many people doing gig work are designated self-employed. But this has not come without legal challenges – and successful ones at that.

In 2021, the Supreme Court ruled that Uber drivers must be treated as workers after they challenged their self-employed status at a tribunal in 2016. Th­e judgement found that, in reality, drivers were subordinate to Uber. It was a landmark case.

At the time of the ruling Alan Lewis, partner at Constantine Law, told HR magazine it meant the contractual status of gigging individuals was now less important than the reality of gig work and that employers could no longer rely on substitution clauses to test employment status. He said: “This decision will have huge implications for the rights of UK gig economy workers.”

The judgement has sparked a slew of other claims along similar lines. Addison Lee, BCA and Bolt drivers are currently pursuing recompense over their self-employed status, while Amazon drivers have a group case open regarding their own employment status.

For those who are either gig employers or thinking about it, Leigh Day’s Morrison says there needs to be an awareness that despite Uber feeling it could challenge the initial tribunal ruling across five years – growing market share, brand and accounts in the interim – this approach to doing business might become less viable.

“It’s a clear precedent from the Supreme Court,” he says, “Will they want to consider these ultimately fruitless appeals from employers? Or will they reject them? That’s probably the major change here.”

 

“Some platforms are… creating a local niche where they’re not competing on price but on quality”

 

That said, there are doubts the Uber case will lead to overarching changes regarding UK employment status, with Morrison explaining that the way the system currently works means that judgements only apply to the group of individuals bringing the claim, and only then for a specific moment in time.

“You end up in this endless cycle of cases and the company [after the ruling] goes okay so now we’ve changed the contract and these are no longer workers so cases only win up to a certain point in time,” Morrison says, adding this, alongside a lack of disincentivising penalty, can often benefit the businesses.

With no employment framework change forthcoming and other criticisms of weak labour rule enforcement, Kermode posits that no employer would logically want to change how they engage gigging individuals to their own commercial detriment.

“Although I think there is a moral duty to always treat the workforce properly, some gig companies won’t change how they engage their workforce saying we won’t change until our competitors do,” says Kermode – and a 2021 blog post from Uber’s CEO hints at just this.

As such, Tim Sharp, senior policy officer at the TUC, believes that until the government clears up the status and rights issue, despite tribunal wins, the balance is firmly tipped for employers.

“And there will be a willingness from some employers to exploit loopholes,” he adds.

 

Rights formalised

With the current litigation relying on case law, some are calling for an overhaul of the employment status framework to provide clarity for both employers and employees and to make certain employment rights sacrosanct.

“The law is not optimised for the gig economy and continues to be a source of tension between gig economy workers and those they are working for,” Kate Palmer, HR advice director at Peninsula says, noting that recent cases only give workers the opportunity to chase specific employment benefits, rather than sparking wholesale change, such as holiday pay.

However, there is doubt the government has an appetite for an overhaul – meaning post-hoc winning of some employment rights, via tribunal, might continue as it does now.

As Seb Maley, CEO of Qdos, sees it, this will be frustrating as the patchwork of gig economy case law will only be added to which could create extra confusion. “Ask the man on the street what a worker is compared to an employee, and they just won’t know,” he says.

When asked about movement on the employment status agenda, non-implementation of aspects of the 2017 Taylor Review (which recommended the creation of dependent contractor status, increasing legal clarity around employment rights and creating better tests for worker status) and the 2018 Good Work Plan, the government didn’t respond to HR magazine on whether it had immediate movement on the agenda.

“Our [current] three-tiered employment status framework strikes the right balance between the flexibility our economy needs and worker protections,” a government spokesperson says, pointing towards 2022’s issuance of employment status guidance – widely criticised for not going far enough – and the continued use of employment tribunals to solve issues within the gig economy landscape.

Yet, while appetite for government-backed change in the UK appears limited, across the Channel in the European Union, June proposals for the reclassification of gig economy workers to get the same rights as employees might put pressure on UK gig employers.

Though it is not thought these proposals will change UK law – “The rhetoric post-Brexit is that the UK will move away from alignment with EU law,” says Morrison.

Maley believes the multinational nature of business could hit employers. “There could be direct implications for the UK because there will be a crossover between workers who work in the EU but work via a platform in the UK”, he adds.

 

This is part one of an article appears in the July/August 2023 print issue. 

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