Gig economy latest: City Sprint and beyond
Jules Quinn, January 12, 2017
Do we need new legislation to deal with the complexities of the gig economy, in light of recent court cases?
The case of London bicycle courier Maggie Dewhurst and logistics outfit City Sprint has joined the growing list of legal disputes focusing on the employment rights for gig economy workers, following an employment tribunal ruling in January 2017.
The court ruled that Dewhurst should not be deemed 'self-employed' but rather a 'worker'. This opens the door for her to claim certain rights and benefits not usually available to self-employed people, such as holiday and sick pay as well as the National Living Wage.
It may be the first of many such claims for couriers. Dewhurst is the latest in an increasingly high-profile stream of gig economy cases, which kicked off with taxi provider Uber in October 2016 and its drivers, who were also recognised as workers rather than self-employed. While the case is subject to appeal, comparable service providers are also facing similar challenges, including Addison Lee, Excel and E-Courier.
The thin line
These cases stress the thin line that exists between the self-employed, workers and employees. The direction tribunals seem to be taking is the level of control that companies have over their workforce, notably staff who are not officially on the books. Many courier, delivery or driver-based organisations have numerous rules that self-employed staff need to abide by. These range from the type of car a driver must have to where they get the vehicle from, rating systems for drivers, how to treat clients, to routes and pricing. All of these provisions erode the flexibility that supposed self-employed workers operate by.
As such, tribunals are suggesting that this relationship means such workers should have fundamental employment rights, such as the national minimum wage, holiday and sickness leave. On the flip side, it may be the case that the workers themselves are also liable. The rulings have significant tax implications and could result in large additional PAYE and National Insurance liabilities as well as related penalties and interest costs on late tax for drivers and couriers.
Stem the tide
These cases are gaining a lot of prominence in the press, with talk of potentially thousands of further cases being launched by drivers, couriers and similar. Payment below the national minimum wage or the National Living Wage is often the catalyst for the dissatisfaction of these groups. The situation could end up being a long and costly process for some companies.
Possible solutions are for government to step in or for a revamp of employment law. However, there is little need for new legislation as these legal issues are less about the letter of the law than companies' interpretation of it. But it may be fair to say that the law and the tax regime are somewhat out of step with the needs of the modern economy.
The emphasis is on firms to strike the right financial balance for their couriers and drivers. We know people want flexibility but they also want to be paid fairly, so initiatives such as paying the equivalent of the national minimum or London living wage can help. Employment rules are fairly robust already so there is little the government can do to prevent such claims. It is down to companies to review their business model and assess the exact scope of their contracts with their staff, whether self-employed or employed.
If organisations can ensure they have the right staffing models in place with contracts and practices that transparently and accurately reflect the reality of the work – as well as competitive but realistic remuneration models – they will avoid facing similar high-profile cases.
Jules Quinn is a partner in the London office of King & Spalding