Plumbers, pilots and parcel couriers: self-employment in the gig economy

Chancellor Philip Hammond’s first budget may have targeted the so-called gig economy with higher National Insurance contributions (before hastily withdrawing them a week later), but the nature of self-employment could be under the legal microscope for some time to come.

It seems that zero hours contracts and the gig economy just can’t stay out of the headlines, these days. Already this month, analysis of data from the Office for National Statistics has revealed that the number of Britons on zero-hours contracts neared 1 million last year, and more than one courier firm was found to be charging drivers who missed a shift.

A much-publicised Court of Appeal decision in February marked another skirmish in the continuing battle over workers’ rights and, specifically, the circumstances in which individuals engaged by a (third party) company to provide services can be considered self-employed.

That judgment followed a tribunal decision last year, which ruled that two Uber drivers were not self-employed, as the global taxi technology giant had claimed, but qualified as ‘workers’ and were therefore entitled to certain workers’ rights, under UK law. Uber has since appealed that decision.

The February case, Pimlico Plumbers v Gary Smith, dated back to 2011 when Mr Smith was dismissed a few months after suffering a heart attack. It took less than a year for him to get a decision from the original Employment Tribunal, but took almost another five for an Employment Appeal Tribunal in 2014 and then the Court of Appeal to uphold that original decision in his favour.

The dispute was just one of many revolving around the issue of self-employment and whether many in the so-called gig economy should really be considered “workers”” and thus be entitled to benefits such as rest breaks, holiday and sick pay and the minimum wage.

It is estimated that up to 5 million people in the UK, from delivery drivers to video producers, are paid for their work in this way. While many appreciate the flexibility that self-employment offers, such arrangements can, like zero hours contracts, be used to exploit staff and avoid employment obligations such as the minimum wage.

Questions about such arrangements are nothing new. Back in 2010, it was drivers for the delivery firm Hermes whose employment status hit the headlines. In 2013, contracts between Ryanair and pilots working for the airline came under scrutiny. The somewhat fluid definitions of "worker" and "employee" have been taxing employers, employment lawyers and journalists for at least a decade.

The 16,000-word judgment in the Pimlico Plumbers case makes for a long read, but one early line from Master of the Rolls Sir Terence Etherton, stands out:

“The case puts a spotlight on a business model under which operatives are intended to appear… as working for the business, but at the same time the business itself seeks to maintain... a legal relationship of client or customer and independent contractor rather than employer and employee or worker.”

Obviously, the Court was well aware that the issues in the case represent a wider phenomenon in the modern workplace and, while this particular decision might not be appealed, it won’t be long before other courts and tribunals will be asked to consider similar issues.

The legal tests of whether a person is truly self-employed are complex and still far from definitive, but any organisation that depends upon such working arrangements could start by considering whether or not they genuinely offer flexibility and benefit to the person doing the work or solely benefit the business.