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Crackdown on gig economy employers

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Written by: Sarah Davidson
26/07/2022
Thousands of casual and gig economy workers may be in line for improved employment protections after the government published guidance clarifying their rights.

While not a change in the law, business minister Jane Hunt said the guidance was “tidying up the rules” to help workers find out if they are being treated fairly by their workplace.

It follows the landmark Uber Supreme Court judgment in February last year, which held that individuals in the gig economy qualify as workers.

This entitles them to core employment protections including earning at least the National Minimum Wage as well as being given paid holiday leave and a company pension.

Employment status affects everyone who works, with basic pay, leave and working conditions dependent on whether a person is an employee working for one company full or part time, a worker contracted with one or several companies, or a self-employed individual with full control over who they work with.

So-called gig economy workers typically work for one or a number of services, such as cab drivers working for several ride hailing apps or delivery workers taking orders from multiple services.

Over the past decade an increasing number of companies, including Uber, opted not to employ individuals working for them, instead treating them as self-employed.

By doing this, they saved themselves considerable employment costs by avoiding having to pay employers’ National Insurance Contributions and statutory workplace pension contributions.

Relationship vs reality

Hunt said the guidance was designed to “help curb unscrupulous employers from attempting to exploit the system in order to save on employment costs”.

The guidance read: “For an employer or engager, it is important to understand that the status of an individual they employ or engage is not simply a matter of choice.

“The status is determined by the real nature of the working relationship, not what an employer or engager chooses to call it. Therefore, simply calling someone ‘self-employed’, or putting that term in writing in a contract, does not necessarily mean that the individual will legally be classed as self-employed.

“If the relationship in reality is that of a worker or employee, then the individual is entitled to worker or employee rights regardless of what it says in their contract. Deliberate misclassification of employment status should not be used to deny employees or workers employment rights and protections they are entitled to.”

Figures from payment service Sonovate suggest that 53% of all small and medium-sized businesses currently use or have previously used contractors – with this figure increasing to 81% when looking at just medium-sized businesses.

The guidance includes advice for micro businesses, start-ups and SMEs that have less capacity and legal expertise to understand the law.

Hunt said: “Importantly, this one-stop shop guidance is not just for workers – it will also give businesses the confidence and the tools to better support their staff, helping to increase productivity and drive growth.

“By featuring real world examples of what an individual’s working day or contract may involve – and how that translates into their employment status – this new one stop shop guidance will help to ensure that work pays fairly.”

Instant delivery app Getir’s Kristof Van Beveren, said: “Getir employs thousands of people in the UK in the superfast grocery delivery sector. Our growth plans will see us employ thousands more in the coming months and years and we welcome any guidance, such as this, that can help us contribute further to the UK’s economic growth and create more jobs.”

Workers who believe they are entitled to additional protections should contact Acas for further advice if they think their employment status is wrong.

Hunt added: “Engage your employer in conversations about your rights before taking further steps to hold them to account if needed.”

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