A guide to the ‘gig economy’ – how will it affect you?

Business Support | Economy & Politics | Financial Services | How To | Interview | Interviews | Latest News | National
Paul McGrath, employment partner at McDermott Will & Emery
Paul McGrath, employment partner at McDermott Will & Emery

Business Leader Magazine recently sat down with Paul McGrath, an employment partner at UK law firm, McDermott Will & Emery UK LLP to discuss the ‘gig economy’ and the recent ‘Taylor Review’.

McGrath is an employment and data privacy lawyer, who supports his clients across a broad range of industry sectors through managing their workforces and helping them address various personnel issues.

This includes day-to-day HR matters, helping implement organisational change or, where necessary, acting in employment litigation.

For those that aren’t aware, can you explain what the gig economy is?

“Gig economy” is essentially a catch-all term used to refer to the increasing number of people doing “gig” work – short-term, casual work, often on a task-by-task or piecemeal basis, typically facilitated through mobile phone apps or other new technology aimed at matching sellers and buyers of goods and services.

Can you give examples of businesses involved in in the gig economy?

The most frequently cited examples are Uber and Deliveroo, although, as the recent Taylor Review identified, there are a growing number of other platforms which are facilitating working in this way.

What are the benefits and negatives of the gig economy?

There are different perspectives on this. It potentially offers genuine two-way flexibility between a business and its workforce, providing opportunities for those who may not be able to work in more conventional ways and allowing organisations to scale more easily as their business grows or customer demands fluctuate. It also potentially provides a means for people to undertake additional work to “top-up” income earned from more “traditional” employment, for instance where overtime is not readily available or there are salary freezes.

On the other hand, it is argued that the gig economy deprives workers of core employment rights such as sick pay, holiday pay and the minimum wage, creates insecurity due to uncertainty regarding hours of work and pay levels, and does not provide quality work or meaningful scope for training or career progression.

What of its future – will it become more regulated?

Possibly, but there are no concrete plans as yet. In October 2016, the Prime Minister commissioned Matthew Taylor, the Chief Executive of the Royal Society of Arts, to undertake an independent review of employment practices in the modern economy, with a view to identifying how those might need to change to keep pace with modern business models such as those seen in the gig economy.

The upshot was “Good Work: The Taylor Review of Modern Working Practices” – widely referred to as the “Taylor Review” – published on 11 July 2017.

Fundamentally, the Review suggests that platform based working, as utilised in the gig economy, should be protected whilst ensuring fairness for those working in and those competing with it.

What do Business Leader readers need to know about Good Work: The Taylor Review of Modern Working Practices?

Whilst concluding that ‘The British way’ works and we don’t need to overhaul the current system, the Taylor Review makes a wide range of recommendations for how employment laws could be reformed to achieve what it terms “good work for all”. These are now being considered by Government.

Key proposals include:

Retaining the current three-tier approach to employments rights and status (employees, self-employed/independent contractors – and a renamed intermediate category of “dependent contractor” to refer to workers who are neither employees nor truly self-employed).

Making it easier for people to establish status as a “dependent contractor” (and therefore entitlement to core rights, such as national minimum wage, paid holiday and other working time rights), by focusing more on the degree of control that a business exerts over them, rather than the extent to which they are required to perform work personally.

Introducing additional protections for “dependent contractors” and stronger incentives for organisations to treat them fairly. For instance, written statements of core terms on day 1 (with a right to claim compensation where this is not provided) and a right for agency workers to request a direct contract of employment where they have been placed with the same end-user for 12 months, which ought to be considered in a reasonable manner.

Establishing a Government online tool to help individuals and employers determines employment status in the majority of cases.

Changing the Employment Tribunal system so that there will be expedited hearings on employment status, without a hearing fee, together with the onus being placed on businesses to prove that the individual does not have the rights claimed.

Consistency of approach for both employment rights and tax purposes.

Requiring companies beyond a certain size to make public their model of employment and use of agency services beyond a certain threshold.

Adapting the “piece rates” legislation to ensure that those working in the gig economy are still able to enjoy maximum flexibility whilst earning the national minimum wage (subject to them assuming an appropriate level of responsibility for choosing to work at times of low demand).

A 52 week (rather than 12 week) reference period for calculating holiday pay for atypical workers and the ability to receive “rolled up” holiday pay.

Reform to Statutory Sick Pay so that it is explicitly a basic employment right, comparable to the National Minimum Wage, for which all workers are eligible regardless of income from day 1 (paid for by the employer and accrued incrementally).

What do you make of it?

The Review’s objectives are certainly laudable and it makes a number of sensible suggestions. However, there is clearly a lot of further detail that will need to be ironed out of many of the proposals before they can become law, particularly if they are to achieve the desired aims and avoid unintended consequences. For instance, whilst calling for a greater emphasis on “control”, the Review notably stops short of wrestling with what level of “control” by an organisation will be sufficient for employment rights to attach to the relationship, instead leaving that to legislation to determine.

It also remains to be seen whether the minority Government, already laden with delivering Brexit, will have the political clout to delivery any changes that are proposed as result of the Review.

What happens now?

There is no immediate practical impact of the Review for business. The Government is currently taking stock of the findings and the recommendations made and has indicated that it will respond later in the year. For the time being then, it is a case of watch this space.

Did you enjoy reading this content?  To get more great content like this subscribe to our magazine

Reader's Comments

Comments related to the current article

Leave a comment

Your email address will not be published. Required fields are marked *