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Don’t let gig economy companies rewrite the law

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When your business model turns out to be against the law, do you change the business model, or change the law? Gig economy companies such as Uber, battered by repeated legal defeats, want to do the latter. If they succeed, then a handful of mostly lossmaking companies will change the world of work profoundly.

Uber lost a crucial case in the UK’s Supreme Court on Friday, when judges ruled it had wrongly classed its drivers as self-employed. While the drivers can work when they like, Uber sets their fee, selects their customers, monitors their performance and “deactivates” them if they aren’t up to scratch. Yaseen Aslam, one of the drivers who brought the case, says even the freedom to choose when to work is a mirage: drivers who don’t log in at busy times and drive long hours won’t cover the cost of car payments, insurance and maintenance. “It’s mentally exhausting, people don’t see that side,” he told me. “The worst thing is when they deactivate you, that is so inhuman.” Gig companies have lost similar legal battles in California, France, Spain, and the Netherlands.

It looks like the end of the legal road for the gig economy. The companies will either have to give workers more control (difficult to combine with a seamless, on-demand service) or employment rights such as the minimum wage and sick pay, which would probably lead to higher prices. Employers have to pay more tax too. Consumer demand for these apps may or may not hold up if the services stop being unfeasibly cheap. For Jeremias Adams-Prassl, an Oxford university law professor, the “single biggest message” from the UK ruling is that “you don’t get to choose whether the law applies to you or not”.

But there is another possible outcome. Rather than adapt their business models to fit the law, gig companies can try to amend the law to fit their business model. They have already succeeded in California, where they spent $200m to convince voters to support Proposition 22, a measure that allows them to continue to treat workers as self-employed with some upgraded benefits and protections. The gig companies’ lobbyists are now pushing “Prop 22” as a national model in the US. They are also trying to cut deals with unions that would give some representation to gig workers while holding the line on their status as independent contractors.

The companies are trying a similar approach in Europe. Uber published a “white paper” this month offering to “work hand-in-hand” with EU policymakers to create “new industry standards for platform work, while ensuring it is recognised and valued at a legislative level”. Uber might also push the UK government to bring new legislation to redefine the status of workers.

It’s undoubtedly true that labour market rights need a 21st century update. The genuinely self-employed would benefit from portable benefit funds to which different clients could contribute, for example. The inflexibility and unpredictability of work in some low-paid sectors needs urgent regulatory attention.

But it is important not to conflate these ideas with the solution offered by gig companies. They want to codify the notion that a company can exert much of the power of an employer with few of the responsibilities. A new law would tempt other companies to downgrade or “Uberise” some staff to save money. After Prop 22 passed in California, Albertsons, the supermarket chain, informed delivery driver employees they would be replaced by contractors. “Workers in all sorts of industries — from agriculture to zookeeping — could benefit from the structure that Prop 22 provides,” wrote Shawn Carolan, a partner at early Uber investor Menlo Ventures, in a recent article.

What would a world with vastly more Uberised workers look like? On the plus side, it would make some services cheaper (as Uber has done with taxis). That would allow the middle-classes to enjoy levels of convenience once only available to the wealthy. But is that gain worth hollowing out the tax base and creating a subclass of workers? Last year, Uber’s chief executive Dara Khosrowshahi shared his vision of the future. It wasn’t about technology or liberated workers. It was mundane and — to my ears — somewhat bleak. “Eventually, you know, I can see a world where if you want to take cash out from the bank, someone will come and deliver cash to you, right? It’ll be anything that you want delivered to your home.”

sarah.oconnor@ft.com

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Gig worker rights battle moves to Toronto

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The battle for gig worker rights has come to Canada, where the Canadian Union of Postal Workers (CUPW) has launched the Gig Workers United campaign. It is the latest in the global movement to increase wages and improve working conditions for gig workers who rely on app-based companies for employment.

“We have to stand up for ourselves — the streets don’t look out for us, the apps don’t look out for us, so we’re looking out for each other and collectively calling out a bad business model,” Narada Kiondo, one of the courier spokespersons for Gig Workers United, said in a statement announcing the organizing effort. “The way it is just can’t continue — if the gig economy is going to work for our society then it can’t be based on squeezing delivery workers and restaurants for profit and dodging our labor standards. And we’re going to persist, and we’ll win, because our bodies and our livelihoods are on the line.”

The roots of the organizing effort were in a similar effort two years ago. The Justice for Foodora Couriers worked to unionize delivery app Foodora couriers. The German company expanded to Canada in 2015. Foodora claimed that couriers were independent contractors and not entitled to form a union. On March 4, 2020, the Ontario Labor Relations Board ruled that Foodora couriers were “dependent contractors” and therefore could unionize.

On April 27, 2020, Foodora announced it was closing its Canadian operations.

Jan Simpson, national president of CUPW, said the lessons from the Foodora fight are that gig workers have rights to unionize.

“The couriers have shown that traditional union organizing is possible in this space. But they’ve gone farther than that, with community-organizing tactics and collective mutual aid. They’ve formed a worker-led organization that we’re proud to support because their fresh energy and ideas are what it takes to improve working conditions and reject Silicon Valley’s model of exploitation,” Simpson said in a statement.

The battle for gig worker rights is expanding across the globe. Earlier this month, a court in the U.K. ruled Uber Technologies (NYSE: UBER) drivers in London were entitled to minimum wage, essentially making them employees. Uber had appealed a lower court ruling, but the U.K. Supreme Court rejected its argument, saying it was “clear … that claimant drivers were workers who worked for Uber London under ‘worker’s contracts.’” It also said the fact that an Uber driver could turn down work “is not fatal to a finding that the individual is an employee … and does not preclude a finding that the individual is employed under a worker’s contract.”

Read: Prop 22 wins in California; takes Uber, Lyft and other drivers out from under AB5

The nature of the relationship between Uber and its drivers means that the drivers “have little or no ability to improve their economic position through professional or entrepreneurial skill,” the court wrote. “In practice the only way in which they can increase their earnings is by working longer hours while constantly meeting Uber’s measures of performance.”

In the U.S., much of the fight over the status of gig drivers has taken place in California, where voters passed Proposition 22 in November with 58% of the vote. Prop 22 removed Uber, Lyft, DoorDash and other gig drivers from compliance with Assembly Bill 5 (AB5). That bill required companies to treat the drivers as employees.

Prop 22 did include certain provisions for drivers, including new earnings guarantees and health-care stipends among others, but it allows the gig workers to remain independent.

Click for more FreightWaves articles by Brian Straight.

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African fintech startup ImaliPay raises pre-seed funding to service gig economy

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ImaliPay, an African-based fintech start-up is making waves by reshaping the future of work in the gig economy.

The Australian venture capital firm TEN13 reputed for investing in top-tier start-ups has invested an undisclosed amount of pre-seed funding in ImaliPay. ImaliPay joins TEN13’s growing fintech portfolio; the likes of Chipper Cash and Bookipi. Other investors included in the raise are; Finca Ventures, Optimiser Foundation, Mercycorps Ventures, Changecom, and super angels from Norway, Nigeria, UK, and Kenya. The primary aim of the investment is to expand and accelerate its growth and footprint in Kenya, Nigeria, and South Africa to be the one-stop-shop for gig workers’ financial needs.

TEN13’s backing of ImaliPay follows a recent string of events that has elevated the visibility of Africa’s Fintech start-up scene. “We believe this is a perfect opportunity to introduce our growing international network of investment professionals and investors to one of the most exciting emerging Fintech companies in Africa, ” said TEN13 Managing Partner, Stew Glynn.

The growth in the African gig workforce is being propelled by the growth in digitisation and smartphone penetration. Gig workers constitute a significant proportion of the economy within ImaliPay’s target markets and this market segment is expected to grow rapidly over the next decade. ImaliPay offers gig workers a one-stop-shop of financial services such as the ability to seamlessly save their income and receive in-kind loans through a “buy now, pay later” model tied to their trade. Bolt drivers in Kenya can now request a fuel loan and payback after 3-4 days, this allows them to get more work done and Safeboda riders in Nigeria can now buy on credit bike parts, fuel, and smartphones to keep their gig moving and reduce any downtime. Other products to be offered off the platform include insurance and investment options to foster a safety net for this hard-working but vulnerable part of the population.

ImaliPay was co-founded in 2020 by Zimbabwean Tatenda Furusa and Nigerian Sanmi Akinmusire who met whilst working at leading payments company Cellulant. They believe the backing of the start-up by a notable venture capital company such as TEN13 has tremendous benefits. “It’s a great opportunity for investors to participate in the fintech revolution and a fast-growing segment. Our vision at ImaliPay is to advance financial health and inclusion for gig workers who struggle to manage and access flexible financial services that are often only available to traditional SMEs”, said Furusa.

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EU seeks views on gig workers’ rights ahead of possible law

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By Foo Yun Chee

BRUSSELS (Reuters) – The European Commission on Wednesday took a step towards improving the rights of gig economy workers with the launch of a public consultation to determine their legal employment status and how to improve their working conditions.

Lockdowns to contain the COVID-19 pandemic have increased demand for casual workers as food deliverers have hired drivers, while cleaners, needed to battle the spread of infection, have faced health and safety risks.

Courts and regulators have meanwhile sought to correct the shortcomings in the gig economy.

The UK Supreme Court ruled last week that Uber drivers are entitled to workers’ rights, such as the minimum wage, and a Spanish court said in September that riders for Barcelona-based food delivery app Glovo were employees, not freelancers.

The EU executive said it wants feedback from trade unions and employers’ groups during the six-week consultation. A subsequent consultation will look into the content of a possible law by the end of the year unless unions and employers decide to negotiate the issue themselves.

“There is no going back as to how things work. The platform economy is here to stay, new technology, new sources of knowledge, new forms of work will shape the world in the years ahead,” the Commission’s digital chief Margrethe Vestager told a news conference.

“These are new opportunities that must not come with different rights, online as well as offline. All people should be protected and allowed and enabled to work safely and with dignity,” she said.

The consultation listed seven areas for possible improvement – the employment status of gig workers, their working conditions, access to social protection, access to collective representation and bargaining, cross-border aspects, the companies’ use of algorithmic management and training and professional opportunities.

Uber said it would work with policymakers and social groups on the proposal.

“Any legislative initiative should be grounded in what platform workers value most – flexibility and control over their work, transparent and fair earnings, access to benefits and protections, and meaningful representation,” the company said in a statement.

Small companies lobbying group SME Connect urged the Commission to expand the consultation to other groups.

“Looking at these issues solely through the prism of employees/employers’ organisations risks a failure to account for these platforms and those who work on them,” its president Paul Rübig wrote in a letter to Vestager.

(Reporting by Foo Yun Chee; editing by Philip Blenkinsop and Barbara Lewis)

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