employment law

What is the ‘gig economy’and how to protect your business

Over the past year or so the so called ‘gig economy’ has come under the spotlight with the government commissioning a review into this new way of working. The Taylor report was published in July 2017 and provided a number of recommendations to government regarding the gig economy. This was accompanied by a number of decisions in the courts in respect of holiday pay and the employment status of various types of workers in the gig economy.

What do we mean by the ‘gig economy’?

The Oxford English Dictionary defines this as ‘a labour market characterised by the prevalence of short-term contracts or freelance work as opposed to permanent jobs’. In a world of ever changing technological advances, the way we work is changing. Many workers are now engaged by a number of businesses, on a series of particular assignments, or “gigs”. Whilst this kind of casual employment is not new, the way in which workers are engaged by business is. Companies such as Deliveroo and Uber use online platforms to engage individuals on short term assignments. These companies have made the headlines recently following a

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number of decisions by the courts where it has been decided that some self employed contractors are actually “workers” and are therefore entitled to more rights and protection.

So, what is the difference between an employee, self employed contractor

and a worker, and why is it important?

The law provides for three types of worker: employee, selfemployed/freelancer and a worker. Unfortunately for businesses, there is no ‘one size fits all test’ when it comes to employment status and each situation will turn on its own facts. If someone is categorised as a worker then they will be entitled to a number of additional rights including: • Paid holiday • National minimum wage • Rest breaks • Whistleblower protection

The right to paid holidays

The right to paid holidays could have a huge impact on businesses. A recent decision by the European Court of Justice (“ECJ”) (King v Sash Windows Workshop Ltd) has ruled that UK law in this area is not compatible with the European Directive. Briefly, the case concerned an individual who was engaged as a self-employed contractor, but who was actually found to be a worker. Upon the termination of his contract he made a claim for backdated holiday pay. As the law stands, workers must take their 20 days leave entitlement during the holiday year. Any unused holiday is lost (apart from holidays which the worker has not been able to take due to them being on statutory leave such as maternity leave). In this case the ECJ said that it was unlawful for the UK to forbid the carry over of holiday entitlement where an individual has been denied their right to take 20 days paid holiday per year. The ECJ stated that it does not matter that a worker has not requested the paid leave (because they didn’t know they were entitled to it) in order to be paid for it. Further, it stated that the cut off period of 2 years back pay for holidays introduced by the UK was also not compatible with the European Directive. This has left the door open for arguments that entitlement could go back to 1996, the date of the Working Time Directive. The case has been referred back to the Court of Appeal where it will decide what steps need to be taken to ensure that UK law is compatible. A decision is expected soon. It should also be noted that although the issues in this case arise from European law, even post Brexit, as we currently understand it, these obligations will remain.

How to protect your business

It would be prudent for organisations who engage individuals using casual contracts to carry out a risk analysis as to whether these individuals may be regarded as workers rather than self-employed contractors. If individuals are identified as workers, they are entitled to be paid the national minimum wage and holidays. Businesses should assess how much this potential liability could cost and budget accordingly.

Chloë Leyland

Analysis Legal LLP www.analysislegal.co.uk