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Regulation of UK gig economy after the election

SMEs prepare for hard Brexit


The UK gig economy is significant. It has doubled in size over the past three years and now accounts for 4.7 million workers.

Some 9.6% of working-age adults work for an online platform at least once per week (Source: University of Hertfordshire).

The sheer scale of the gig economy and recent court cases about workers rights have made it an important election issue for the 12 December 2019 poll. The main parties have very differing policies on the protection of workers rights and the regulation of the gig economy.

With such an unpredictable election, we have examined the policies of each of the main parties to determine how the gig economy might be impacted by these policies.

The Conservative Party policy

Whilst the Tories have yet to publish their manifesto, they gave a clear indication of their policies in the Queen’s Speech on 14 October 2019. With respect to the gig economy, the government said that it would implement proposals as set out in the 2017 Taylor Review.

The Taylor Review

The Theresa May Government commissioned the Taylor Review to explore the changing labour market and if workers’ rights need to be better protected. The report was published in July 2017.

With respect to the gig economy, the report recognised the value of flexibility in the way people work, and that much of the work is well-paid. However, the main conclusion was that all work should receive the same basic rights, such as the minimum wage and holiday and parental leave. At the moment, these rights are not afforded to “gig” workers because they are deemed “self-employed”.

The report also called for the tax treatment of full employees and self-employed people to be reformed so net pay rates are similar.

 

Labour Party policies

As at 18 November 2019, the Labour Party has yet to release its election manifesto. However, they have made a number of policy announcements on labour rights including a four-day week and the abolishment of the Trade Union Act of 2016.

With respect to the gig economy the best guideline for future policy is Labour Shadow Chancellor John McDonnell’s keynote address to the TUC congress in September 2018.

Labour policy is to give gig economy workers the same rights as full employees. This would give workers entitlement to sick pay, parental leave and protections against unfair dismissal which they don’t currently enjoy. The burden of proof would be on employers to prove that workers are self-employed and not workers.

Potential impact of policies

Labour’s position is the clearest and likely to be the most costly for gig companies. The bar for self-employment status would be set very high and it is very unlikely that large players, like Uber would escape legislation. Companies would be liable for significant additional costs associated with full employee entitlements. The flexible and low-cost business models of gig companies could come under existential threat.

The Conservative position is more ambiguous. Companies caught by worker-categorisation would be liable for increased costs such as holiday pay and paternal leave but not the costs of full employment as per Labour proposals. The line between worker categorisation and self-employment is ambiguous and it is not clear where the line would be drawn.

Recent case law and worker categorisation

There have been a number of recent legal cases involving Uber, Deliveroo and Pimlico Plumbers that are likely to influence policymakers. The most influential case involves Uber.

In 2018, Uber lost its appeal against an Employment Tribunal ruling ordering it to treat its drivers as workers. The ruling affords drivers rights to the minimum wage as well as sickness and holiday pay.

Uber argued that the drivers were self-employed independent contractors, and that there are no worker or employee obligations. Uber classes itself as an ‘agent’ of self-employed drivers. It appealed against a previous tribunal’s findings and said that drivers would be deprived of valuable personal flexibility.

The judge threw out Uber’s arguments against a previous tribunal’s findings and found that drivers must be classed as workers and afforded the corresponding rights under UK and EU law.

In the original ruling against Uber in October 2016, the judge set out 13 considerations in determining that the drivers were working for Uber. These considerations included Uber’s recruitment process, control of customer information, Uber’s rating system acting as performance management, setting of fixed fare rates, Uber’s handling of complaints and forced acceptance of bookings.

Conclusion

A Conservative win would be better for the gig economy. Whether or not a gig company would be subject to increased costs would depend upon how the Taylor Report is be implemented. Case law may provide some guidance and companies should review work worker categorisation criteria set out in judgements.

In our case, TidyChoice is a genuine marketplace for independent London house cleaners. We allow cleaners to control their rates, payments and working practices. Our risk of worker categorisation would be at the lower end of scale.



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