The gig economy has had some large knocks over the last year. Companies such as UBER, Deliveroo and Addison Lee have all recently lost superior court cases instigated by workers. All three organisations have been accused of misclassifying their workers as self-employed.
In February of this year, multibillion-dollar company, Uber lost a crucial legal fight in the U.K. as the country’s Supreme Court upheld a ruling that its drivers are workers, not independent contractors. Whilst Uber is faced with some uphill challenges from here, their drivers have taken a huge step towards shaking the gig economy and awakening organisations to the risks of misclassifying their workers. They will now receive minimum wage, holiday pay & pension. In addition to these rights, the drivers will now have access to trade unions which will unlock their power to engage in collective bargaining.
Similarly, the Amsterdam Court of Appeal ruled against Deliveroo earlier this year. This case relates to drivers being classified by Deliveroo as self–employed. The delivery app came under fire due to the fact they operated control over their workers by scheduling when they would start and end their shift. This would indicate that the workers are indeed employed, rather than contractors. Following in Uber’s footsteps, this movement has spurred Deliveroo workers in London to fight in the Court of Appeal for the right to collective bargaining.
To follow suit, Addison Lee Drivers, a private cab company based in London has also been dealt a blow in a recent court ruling. The UK Court determined that Addison Lee’s drivers fall into the employed (worker) category much like their counterparts at UBER & Deliveroo. Again, Drivers will be entitled to national minimum wage, paid holiday and pension.
The aforementioned organisations maintained that the drivers they engaged where self-employed as they choose their own hours and place of work, and often found additional work through rival apps.
It’s increasingly clear that employment legislation in the UK has not caught up with the pace of the gig economy’s growth, The Judiciary are increasingly being called upon to make decisions in the absence of a legislative framework. This is not a good idea for settled law and leads to anomalies without the introduction of formal legislation to govern worker status in this space. The need for additional legislative protections is stark for low choice or no choice workers operating in the gig economy.
It is important to note that the employment and tax status of your contractor workers is not always clear which is especially important to note with IR35 in the UK, which came into effect on the 6th of April 2021.
The bottom line is to correctly and compliantly engage your workers to avoid misclassification and the penalties, fines and reputational risks that come with that.