Those registered as “self employed” now stands at 15% (or 1 in 6) with ever increasing numbers carrying out a variety of work for a number of businesses. This has been labelled the “gig economy”. Businesses can now use online platforms to outsource tasks to a large pool of workers as well as people being engaged directly on temporary contracts or doing separate pieces of work, each paid separately, rather than being employed by one employer. Given the financial savings to be made by using this business model, rather than employing individuals directly, it is likely that more casual workers than ever will be carrying out services on a self employed basis in the future. This has significant implications for employment law and for the economy.
The government is alive to this rapidly growing business model for a number of reasons:
- In October 2016, the BEIS Committee launched an inquiry into the future world of work, which focusses on the rapidly changing nature of work, the status and rights of agency workers, the self-employed and those working in the gig economy. As part of this review the Committee will consider whether the current definitions governing employment status need to be updated to reflect the new kinds of business models.
- On 30 November 2016, BEIS launched the Independent Review of Employment Practices in the Modern Economy. The review will consider the implications of new models of working on the rights and responsibilities of workers, as well as on employer freedoms and obligations. The outcome will inform the government's industrial strategy. The review is expected to last six months.
- Additionally, on 2 December 2016, the Office of Tax Simplification (OTS) published a focus paper exploring tax issues and implications of the gig economy.
These new business models are springing up everywhere from Uber to Deliveroo as well as more consultant based work in the field of technology companies. There is significant uncertainty surrounding the status of this new type of worker and this is unlikely to be resolved in the near future. Most recently Uber taxi drivers won their case in the Employment Tribunal which concluded that they were ‘workers’ and not self employed contractors and therefore entitled to statutory entitlements.
If you are a business that that engages consultants or other self employed contractors, you will need to consider the true nature of the engagement. This is important in order to understand whether these individuals are entitled to payments such as the national minimum wage, holiday pay and sick pay.
If they are considered to be employed rather then self employed or workers, they will be entitled to protection of their employment rights including the right not be unfairly dismissed, the entitlement to a statutory redundancy payment and a statutory notice period.
It is important to note that no matter what label is applied to the individual by the company engaging their services, an employment tribunal would look at the facts of each specific case. It is therefore vital that if you are a company that regularly engages these types of individuals that you have the right contracts in place, and that you are fully aware of the potential employment rights that could arise. If you are a company that engages these types of workers now would be a good time to review your arrangements. Please let us know if we can help you with this.