The gig economy has been a huge factor in the change to working practices; it has also been described as the “uberisation” of the workforce. The term is used to describe individuals who earn their living through multiple short-term engagements or “gigs”, often for multiple work providers, on a freelance basis. Such work is generally facilitated through technology, such as web platforms and mobile apps.

Although this kind of workforce can be difficult to define and track, it is estimated that, out of a total workforce of 32 million in the UK, there are around 5 million people earning at least some income from the gig economy.

The power of three: employee, worker and self-employed contractor.
Employees performs their work themselves, and there will be a mutual obligation for the employer to provide work and for the employee to do that work. The employer will have control over the individual as to the how, what and when of their day-to-day work.
The next step down in terms of rights and protections is a worker. A worker has more freedom than an employee in terms of how, when and where they work. There may be no obligation to provide work to them, or for them to perform it when it is offered. The critical thing, however, is that they are required to perform whatever work they do themselves – there is no opportunity to send someone else in their place.
Finally, an individual can be self-employed. They are in business on their own account; they provide their own equipment, bear the risk and take the reward. There will be no obligation to provide their services personally, so it is essential that they have the right to send a substitute and are not subject to a significant degree of control by their ‘client’.

Employment status determines an individual’s legal rights. Employees have the most rights, such as unfair dismissal rights and flexible working rights. Workers don’t have those protections, but benefit from discrimination and whistleblowing protection. Self-employed individuals have very few such rights (but advantageous tax status).

Recent cases have tested the boundaries of employment status. An Uber driver, who could choose when he logged on to the Uber App, choose whether to accept a fare, owned his own car and did not have to commit to doing a set number of hours per week was, in fact, a worker.

The Tribunal was very critical of Uber’s attempts to make the driver look like he was self-employed, and referred to “fictions” and “twisted language” in the contract. The Tribunal did not accept that their relationship was one of two independent business undertakings contracting at arm’s length. The tribunal ignored the contractual documentation because it did not correspond to the reality of the relationship between Uber and the drivers.

Many employers are tempted to by the “hands-off” approach of calling people “self-employed” when in reality they are not. It is clear from this case that the best way to avoid problems around worker status is to structure your arrangements with staff to reflect what is happening in practice. Remember, status can be fluid: review your working arrangements periodically to consider whether, in practice, things have changed meaning your approach may need to change too.
For further information, please contact Koichiro Nakada – Head of Japan Business Group (koichiro.nakada@lewissilkin.com) and Yoko Nakada - Senior Associate, Deputy Head of Japan Business Group (yoko.nakada@lewissilkin.com).
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