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Although most recent news cycles have been dominated by the Brexit negotiations, it has also been an interesting month for anyone following developments in relation to the gig economy. Uber has lost its Employment Appeals Tribunal appeal in relation to worker status of its drivers, whereas in the Central Arbitration Committee, Deliveroo was successful in establishing that their riders were not workers. Most recently, a joint report has been published by the Work and Pensions Committee and the Business, Energy and Industrial Strategy Committee of the House of Commons, incorporating a draft Bill to deal with issues raised in the Taylor Review earlier this year.

The EAT decision in relation to Uber will not be very surprising to anyone. The EAT re-emphasised the importance of looking at the reality of the situation, rather than any contractual fiction established by the parties. Although Uber attempted to argue that they were simply “agents” for their drivers, and that the fact that there was inequality of bargaining power did not mean that the written agreement should be ignored, the EAT did not agree with this submission. It noted that the “issue at the heart of the appeal” was “when the drivers are working, who are they working for?”.

The EAT held that the ET was correct in its assessment of the true position in this case, taking into account issues such as the scale of the operation, the ability of the drivers to negotiate terms with passengers, and the inability of the drivers to grow their ‘microbusinesses’ in practice. Although the EAT struggled with the issue that drivers could, in theory, hold themselves out as seeking work from other operators in the same territory at the same time as doing so from Uber, they concluded that in practice there was a crucial element of “mutuality of obligation” between Uber and the drivers because the drivers were told that they should accept at least 80% of trips offered to be entitled to continue working for Uber. Uber’s appeal was therefore rejected.

In Independent Workers’ Union of Great Britain (IWGB) v RooFoods Limited T/A Deliveroo, the Central Arbitration Committee had to consider whether Deliveroo riders were “workers” for the purposes of being counted as forming part of the proposed bargaining unit for statutory recognition of a trade union, which would allow IWGB to negotiate collectively in relation to issues such as pay and hours. Under the Trade Union and Labour Relations (Consolidation) Act 1992, the IWGB’s application for recognition would only be admissible if at least 10% of workers in the proposed bargaining unit were union members, and 50% of workers in the bargaining unit would be likely to be in favour of recognition.

According to IWGB, there were 100 Deliveroo riders in the Camden Kentish Town Zone (the bargaining unit proposed by IWGB), of which 32 were union members. However, Deliveroo rejected the claim that anyone within the proposed bargaining unit was a worker.

The CAC agreed. It stated that its duty was to determine what the actual obligations on each of the parties were (as opposed to what the written agreements drafted by Deliveroo actually said). It considered the “central and insuperable difficulty for the Union is that we find the substitution right to be genuine, in the sense that Deliveroo have decided in the New Contract that Riders have a right to substitute themselves both before and after they have accepted a particular job; we have also heard evidence, that we accepted, of it being operate in practice.” For instance, one Deliveroo rider gave evidence that he offered his friend the chance to substitute for him regularly, taking a 15% cut from the fee paid by Deliveroo and thereby making a profit. Deliveroo permitted this practice. Riders were also permitted to be available to work for competitors while also being marked as available for Deliveroo, and were even permitted to wear branded clothing of a competitor while carrying out Deliveroo work. There was no requirement, such as with Uber, for riders to accept a certain percentage of jobs offered. In the circumstances, the CAC held that the fact that riders did not undertake to do personally any work or services for Deliveroo was fatal to the IWGB’s claim that they were workers.

The complexity of the position in relation to determining employment/worker status has been recognised in the joint report of the House of Commons Work and Pensions Committee and the Business, Energy and Industrial Strategy Committee which was published on 15 November. It states that “it is difficult for the average worker to understand what category of status they fall into unless they have an extensive knowledge of case law”, and puts forward a number of recommendations for the government to consider, including a draft bill, designed to implement these. Briefly, the main recommendations are:

• Introduction of clearer statutory definitions of employee and worker with the latter status emphasizing the importance of control and supervision rather than a narrow focus on substitution;

• For companies with a self-employed workforce above a certain size, classifying individuals as “workers by default”, with the onus on the engaging company to establish genuine self-employment status;

• A pilot scheme of introducing a premium on the NMW for workers who work non-contracted hours;

• Extending the period of time required to break continuity of employment from one week to one month;

• Introducing punitive fines and costs orders to be imposed by Employment Tribunals where employers have already lost similar cases;

• An entitlement for all workers to receive a written statement of terms and conditions, including confirmation of the type of contract they are employed under;

• Ending  the so called  “Swedish derogation”  in relation to agency workers which means that their pay does not have to be equalised with the rest of the workforce after 12 weeks’ service as other terms in their contracts do;

•  Including  workers  as well as employees in the definition of  those  covered by the Information and Consultation Regulations 2004 and reducing the minimum threshold for implementation from 10% to 2% of the workforce;

• Increasing powers of enforcement by the Director of Labour Market Enforcement, and introducing significant penalties for non-compliance.

While the joint report emphasises that businesses who comply with the law should welcome the recommendations, as these measures would “level the playing field” and stop companies from getting an unfair advantage by exploiting workers, the CBI Managing Director for People and Infrastructure, Neil Carberry, voiced concerns that the proposals above would limit the flexibility for firms to create jobs, especially in relation to agency workers. It remains to be seen which, if any, the Government takes forward. Its own response to the Taylor Review is expected later this year.

One thing that is clear is that the gig economy remains a controversial and complex subject. If you have any queries or concerns about your own business’s employment structure, please contact a member of the Stronachs Employment Team.

Annika Neukirch, Solicitor

Chambers UK 2018

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