twitter  linkedin  googleplus  Miller Samuel Hill Brown's Blog

Miller Samuel Hill Brown Solicitors Blog

From time to time we will post news articles and announcements relating to the firm and to various legal issues that may be of interest to you.
6 minutes reading time (1274 words)

Are Contemporary Employment Laws Fit for Purpose?

The modern evolution of the “gig economy” through the growth of companies including Uber, Deliveroo and Pimlico Plumbers, is challenging the existing construction of employment law and its ability to adapt to and regulate this type of modern-day employment. If left unregulated, this working environment has the potential to give rise to increased job insecurity and contribute to the vulnerability of workers engaged without rights including sick pay and holiday pay. 

The employee status of those involved in the gig economy has had considerable attention in employment tribunals and courts in the UK and in many countries across the world where the gig economy has similarly prospered. Determining the legal status of individuals employed in the gig economy as either self-employed individuals or workers is a vital distinction in terms of the employment rights available to them. Workers benefit from employment rights including sick pay, holiday pay, rest breaks and the National Minimum Wage, whereas self-employed individuals don’t.

The ongoing ambiguity for individuals engaged in the gig economy has led to the much-anticipated Taylor Review of Modern Working Practices. This review, published in July 2017, intended to provide the Government with recommendations for much needed legislative reform in this area. Are these recommendations representative of solutions for the challenges facing those employed in the gig economy and how will employment law adapt to meet the needs of those employed in modern-day businesses?

Taylor Review Recommendations

The Taylor Review engaged with key stakeholders, including businesses, employee representative bodies and the legal profession, to analyse and understand the implications of modern-day business models and the current situation on rights and duties of workers. Despite this due diligence, the report has been criticised for failing to represent the struggles faced by the modern-day workforce. 

The report includes a number of recommendations concerning various aspects of employment law and current employment structures: 

  • Dependent contractor – one of the most widely reported recommendations in the report is the proposal that a new employment status of “dependent contractor” be given to workers in the gig economy in instances where such an individual is under the “control” and “supervision” of the employer. Under the recommendations, dependent contractors would be afforded employment rights, including holiday pay and sick pay. Many argue that this is a wholly superfluous addition to UK employment legislation as recent litigation has established that many of those working in the gig economy should already be afforded worker status and the employment rights attached to this.
  • Swedish derogation – the report recommends that the “Swedish derogation loophole”, that allows employers to pay agency workers less than permanent employees for performing the same role, should be abolished.
  • Authoritative determination of employment status­ – the report recommends that “Government should ensure individuals are able to get an authoritative determination of their employment status without paying any fee and at an expedited preliminary hearing.” This would be extremely beneficial for those working in the gig economy and would serve to shed light on an otherwise grey area. 
  • “Cash-in-hand” economy – the report targets the cash-in-hand economy and notes that cash-in-hand jobs, including window cleaning and decorating, are worth up to £6 billion a year, much of which is untaxed. The report notes that billions of pounds of extra tax revenues could be collected if payments for casual work were made via Government-accredited platforms. Although a valid opinion, this seems to have reignited the controversy of persisting large-scale tax evasion by multinational companies and wealthy individuals, an amount that is likely to be overwhelming more than the uncollected tax revenues from the cash-in-hand economy.
  • Employment tribunal fees – the report recommends that individuals seeking to challenge their employment status in an employment tribunal shouldn’t be obliged to pay tribunal fees, and further that the burden of proof should be moved to the employer. This recommendation was reinforced through the recent Supreme Court ruling determining that the Government will be required to repay £32 million in fees charged to people using employment tribunals. The Court held that the Government was acting unlawfully and unconstitutionally in introducing fees in 2013 in an attempt, it said, to reduce the number of malicious and unfounded cases.
  • Zero hour contracts – the report doesn’t recommend that these working agreements be prohibited, rather the report proposes that workers should be entitled to “request” a fixed-hour contract. This proposal underlines criticisms that the Taylor Review fails to represent an understanding of the challenges facing a -workforce. This proposal places a great deal of faith in employers to overlook profit in favour of the financial security of their workers. This “right” is hollow without the availability of legal recourse to an employment tribunal if such a request is refused and will likely be politely ignored by the majority of employers without legislation creating enforceable rights and reciprocating duties.
  • Workplace health – the report recommends that workplace health should be made a greater priority, as this will have lasting benefits for companies and the economy more generally.
  • Minimum wage – despite the National Minimum Wage being a fundamental tool necessary to prevent exploitation, the report doesn’t recommend that gig economy employers pay the minimum wage for every hour worked. The report recognises that in the context of the gig economy, there can at certain times be an oversupply of labour “effectively flooding the market and driving down the hourly rate to below that of the national minimum wage.” The report states that, “if an individual knowingly chooses to work through a platform at times of low demand, then he or she should take some responsibility for this decision.” Many have criticised this evaluation and have noted that many gig economy workers have no choice in their working pattern for financial or personal reasons. Permitting different rates of pay for different times of work may leave those who are already financially vulnerable open to exploitation. 

How Should Employment Law Adapt to Modern-Day Challenges?

With an estimated 1.1 million people working in the gig economy in the UK, this style of work would appear to be here to stay. Although the gig economy provides individuals with a great deal of flexibility, in reality, employers are equally able to utilise the lack of security inherent in these contracts to their financial advantage, for example by denying basic employment rights including sick pay on the basis that those engaged in employment are self-employed.

In what has become a fast race to the bottom on employment conditions, many of the recommendations proposed in the Taylor Review seem inadequate and discouraging. The future of the gig economy and zero hour contracts will likely be determined by the outcomes of employment tribunal cases.

Brexit equally has the potential to shape the composition of employment law to meet the challenges presented by modern-day employment structures. The UK’s departure from the EU is unlikely to have a significant impact on many UK employment laws by virtue of the fact that many have been brought into effect via UK legislation that will remain in force post-Brexit. However, not to miss the opportunity presented by the constitutional and political crisis that has evolved following the Brexit vote, the inevitable review of EU aspects of UK employment law may be an opportune time to also consider a legislative regime affording specialised rights and duties for those engaged in the gig economy.

Contact Miller Samuel Hill Brown for Legal Advice regarding Employment Law

Our employment law team has experience advising clients on all aspects of employment law and HR issues. For legal advice on employment matters or concerns in relation to your employee status, please complete our online enquiry form or call us on 0141 413 9633.

Voluntary Overtime should be included in Holiday P...
Contract Law Update: Third Party Rights

Get Legal Advice, call: 01412211919

Complete our online form Make an enquiry

Get Legal Advice, call: 01412211919

Online Enquiry

Please let us know your name.
Please let us know your email address.
Invalid Input
  • Nature of enquiry(*)
    Invalid Input
  • Please let us know your message.
    Invalid Input
    Please tick the box below
    Invalid Input