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‘A balance must be struck’ – law changes loom for UK’s gig economy

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How will the gig economy affect UK businesses?

Championed for empowering contemporary workers, yet simultaneously criticised as precarious and exploitative – what does the future hold for the UK’s gig economy and zero-hours contract workers?

Arguments in favour of the gig economy appear at first glance to be both plentiful and convincing. Proponents praise its flexibility and versatility, the opportunities it creates for companies, and the freedom it offers to workers.

The statistics seemingly speak for themselves. An estimated five million people in the UK currently maintain freelance – or ‘gig’ – careers across a multitude of sectors, while nearly 900,000 people work on a zero hours contract basis. The latter figure has grown by 358% since 2012, and now amounts to 2.7% of the nation’s workforce.

That growth is due in large part to the rise of app-based platforms like Deliveroo and Uber, which have opened up the gig economy on an unprecedented scale by effectively making work available to all, regardless of skills or experience.

Some predictions even suggest these models will take over as the prevalent form of employment, with more firms eschewing a full-time workforce in favour of a permanent leadership core supported by gig workers on short-term contracts.

So, why do zero-hours contracts and gig employment continue to prove so divisive?

It could stem from high-profile news stories and court rulings where firms have effectively been accused of withholding employment rights – like paid holiday or sick pay – from workers through manipulation of legal loopholes.

It could also be a consequence of frequent smears evident in politics and popular culture. Labour leader Jeremy Corbyn has attacked zero-hours contracts as ‘exploitation’, while film director Ken Loach – whose latest film Sorry We Missed You highlights the risks of zero hours working – has slammed the practice as ‘modern slavery’.

‘Increasingly one-sided’

Susie Al-Qassab, Head Of Employment Law with London-based Hodge Jones & Allen Solicitors, believes the system can work – but concedes it is often exploited.

Susie Al-Qassab, Head Of Employment Law with Hodge Jones & Allen Solicitors.
Susie Al-Qassab, Head Of Employment Law with Hodge Jones & Allen Solicitors.

She said: “Ostensibly, gig work is a good thing for both employees and employers – but the advantages seem to be increasingly one-sided.

“The criticism that the gig economy is exploitative is easy to understand – they are labelled ‘self-employed contractors’, but are often being treated as workers, without the benefits and protections.

“In many cases, it seems employers are taking advantage of the weak position of such workers, as there will always be someone else to do the job. The balance has tipped too far on the side of businesses.”

This can, Al-Qassab believes, mean workers can put themselves at risk.

She continued: “The paradox of gig work is the flexibility and apparent autonomy which makes it so appealing is also its biggest flaw.

“A gig worker will not necessarily know how much they will be able to earn month on month and this uncertainty can lead to stress.

“As they are often ‘self-employed contactors’, they receive none of the benefits of with employee status – national minimum wage, holiday pay, sick leave.

“If a delivery driver becomes sick and unable to work, they will have no income. This can lead to scenarios where people are continuing to work despite health risks – they simply cannot afford to not.”

‘Good companies have been tarred’

Employers insist the system offers as many pluses to workers as companies, and argue it benefits all when implemented responsibly.

Scott Mullins, Managing Director at Pimlico – a firm which lost out in the Supreme Court in 2018 in a dispute over workers’ rights for its freelance plumbers – said: “The problem with the so-called gig-economy is it has become a catch-all term for contracted employment, which has tarred some good companies with the same brush as those constantly under media scrutiny for poor practices.

Scott Mullins, Managing Director at Pimlico.

“The public’s impression of the gig-economy is that employers are exploiting people’s desire for flexible working, paying low wages and also not offering good working conditions.

“However, in some sectors, such as the home services and construction industries, where the responsible use of self-employed contractors is the norm, the situation is very much different.

“For those in jobs such as food delivery, the workers are dependent on the employer. It’s not the same in sectors like mine. Skilled tradespeople are not dependent at all, even if they are contracting solely to one company, as they can easily take their skills elsewhere should they feel they are not getting a fair deal.

“It is a model that has worked exceptionally well for Pimlico, and we have a very loyal and dedicated workforce of self-employed contractors. They have the choice to go elsewhere if they wish, because their skills are always in demand, but they know they will get consistent, high-quality jobs from us as well as many benefits from being part of the Pimlico family.”

Deliveroo is one of the UK’s most high-profile gig employers; it has more than 25,000 riders on its books, and fields ‘thousands’ of fresh enquiries every week. The firm says 85% of its riders treasure their flexible terms.

A spokesman told Business Leader: “Deliveroo’s flexible model is giving riders greater controls around how they work.

“Riders can choose to work for Deliveroo while working with other companies; there is no other type of work which allows you to work when you want or allows you to work for a competitor at the same time.

“Unlike a zero-hours contract, riders decide for themselves when they ride and how much they ride, by simply logging in and choosing whether to accept orders. This is genuinely two-way flexibility.”

What next?

Gareth Edwards, Head of the Employment team at law firm VWV, says legislation changes due in April 2020’s Good Work Plan could make a difference.

Gareth Edwards, Head of the Employment team at VWV.

He said: “I can see there is a place for zero hours contracts, or for being able to contract on a job-by-job basis; I don’t think those two components of people’s working lives are going away. But I think the regulation around it will probably increase.

“From an individual’s point of view, I think sometimes there’s a concern they are not making an informed choice.

“Part of the reforms talked about includes giving people a statement of terms from day one, and itemised pay statements so they understand more about what they are entitled to, what they are earning and how they are earning it.

“There are various things in the next wave of changes which may help – but equally, I think it’s going to be an ongoing dialogue for some time.”

Scott Mullins agrees the law needs to change, but says it needs to do so in a way which is fair to both employer and worker.

He said: “The law has to evolve to reflect the changing culture of work and employment. It needs to understand there is a legitimate class of self-employed contractor, who may work predominantly for one employer – they may even wear a uniform, carry an ID badge – but they are more of a contractor than a worker.

“I’m all for the government finding changes in the law to protect the poorly paid, poorly treated and poorly appreciated workers – but there needs to be clarity on how it will relate to the highly-skilled self-employed contractors in industries like ours.”

And Susie Al-Qassab believes workers will gain more control over their status.

She added: “There may be more deals such as that between the GMB Union and the delivery company Hermes, which allows gig workers the choice as to whether they want to be self-employed or ‘self-employed plus’. The latter offers union representation, minimum wage and holiday pay.

“What is clear, is that as the gig economy continues to grow, there needs to be more of a balance struck between work that is flexible and work that is simply insecure.”

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As Congress scrutinizes gig worker rules, small-business owners need to know the basics – The Philadelphia Inquirer

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Uber’s UK ruling could have implications for gig economy startups

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Former Uber drivers Yaseen Aslam and James Farrar first brought their case against Uber in 2016
(Carl Court/Getty Images)

The UK’s Supreme Court has rejected Uber‘s appeal against an earlier ruling that said its drivers must be classified as workers, a result that may have a significant impact on other gig economy companies.

The decision—which cannot be appealed—means thousands of UK Uber drivers cannot qualify as being self-employed, entitling them to both minimum wage and holiday pay. The ridehailing company could now face paying substantial compensation to its drivers.

The ruling, which criticized Uber for sidestepping UK labor laws to withhold benefits, could influence other battles between gig workers and the companies that hire them. Earlier this month, the Independent Workers’ Union of Great Britain appealed against a court decision preventing riders for food delivery startup Deliveroo from engaging in collective bargaining due to their self-employed status. Deliveroo, which is backed by investors including Durable Capital Partners and Amazon, is looking to go public this year.

“Employees should benefit from improved rights; however, employers are likely to face increased costs of labor and disruption to their business models, which have proven to achieve rapid scale with gig workers,” said PitchBook analyst Nalin Patel. “The ruling may also now set a precedent in the UK and force other gig economy startups that utilize the self-employed contractor model to rethink how they operate in the region moving forward.”

Former Uber drivers James Farrar and Yaseen Aslam originally won their tribunal against Uber in 2016. Uber appealed the decision, but it was upheld in 2017, and again in 2018 by the High Court.

“This ruling will fundamentally re-order the gig economy and bring an end to rife exploitation of workers by means of algorithmic and contract trickery,” said Farrar, who is also a general secretary with the App Drivers and Couriers Union. “Uber drivers are cruelly sold a false dream of endless flexibility and entrepreneurial freedom.”

In a statement, Uber’s regional general manager for Northern and Eastern Europe, Jamie Heywood,  said the court decision was focused on a “small number of drivers” who used the app in 2016. Since then, he said the company had made changes to its business,  providing free insurance in case of sickness or injury. He added: “We are committed to doing more and will now consult with every active driver across the UK to understand the changes they want to see.”

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The future is now for gig-based entrepreneurship – San Gabriel Valley Tribune

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With Californian Kamala Harris as vice president, it’s clear the new Biden administration is taking its cues from the once-Golden State on labor policy.

In one of its first acts in office, the Biden Administration placed a regulatory freeze on a Department of Labor regulation enacted in the waning days of the prior administration relating to independent contractors.  The rule, according to labor and employment law firm Fisher Phillips, “aims to make it easier for businesses to classify workers as independent contractors.”

It’s unlikely this rule to give more workers freedom to be their own boss and set their own schedules will survive in a Biden administration that was heavily reliant upon labor unions for money and manpower to win the 2020 campaign.

Meanwhile, House Democrats recently re-introduced the controversial PRO Act in Congress, which “seeks to reduce the use of the independent contractor classification by companies such as Uber,” according to CNBC.

Both of these efforts followed the lead of California’s liberal legislative majority, which two years ago enacted the controversial Assembly Bill 5 to severely restrict the ability of Californians to work as independent contractors.  Their goal is to increase union membership and dues and force people to work in traditional, 9-to-5, union jobs that are relics of the past.

Doubling down on AB 5-type restrictions at the national level – which may be the Biden administration’s goal with the nomination of Julie Su, California’s chief AB 5 enforcer, as deputy Secretary of Labor – would be a tremendous mistake.  It would threaten innovation and hurt the ability of Americans who have lost their jobs to put food on the table during a global pandemic.

As documented in the new Pacific Research Institute study, “The Small Business Gig,” Americans are increasingly working in the gig economy.  They don’t want government – whether in Sacramento or Washington, DC – dictating how they can earn a living.

A 2018 Gallup survey found that 36 percent of U.S. workers have some sort of a gig worker arrangement.  Whether renting out an extra room to earn cash to pay the mortgage or using an app to earn a living on an alternate schedule, the gig economy is increasing opportunities for Americans to become entrepreneurs, while providing customers with lower cost services.

Many in California state government see the gig economy as exploitative and disruptive.  But data from the ADP Research Institute shows that 70 percent of gig workers are independent workers by choice.  Gig Economy Data Hub research found that more than two-thirds of gig economy workers are satisfied with their current work arrangement.

Government shouldn’t pick winners and losers in the economy.  New restrictions on the gig economy, like those proposed in Congress, will limit people’s freedom to become entrepreneurs while institutionalizing the old way of doing work.

Instead of adopting regulations at the federal level that 58 percent of Californians – Democrats, Republicans, and independents alike – rejected when they passed Proposition 22 in November, the Biden administration and Congress should take the opposite approach and enact market-based policies to encourage entrepreneurship and innovation.

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