25 July 2018

Gig Economy: Developments in the UK and France

What is the gig economy?

The gig economy is categorised by individuals receiving payment for the “gigs” they do. Those working in the, gig economy do not have fixed shifts and have the flexibility to work as much or as little as they like. This flexibility has been seized upon by food delivery agents, couriers and taxi hire companies who are utilising technology to enfranchise a latent workforce.

Despite having vast potential, it is a market still in its infancy and is experiencing teething problems. In part, the trouble stems from the difficulty to classify the employment status of those working in the gig economy: are they employees or self-employed. The current desire by companies to classify those working in the gig economy as self-employed is a cause for concern for those looking to enshrine workplace rights.

Approaches to the gig economy

France

In France, there is a distinction between “worker” (employee) and “entrepreneur” (self-employed), and this binary distinction is commonplace across all European jurisdictions and beyond. Whilst workers are granted statutory rights and benefits, an entrepreneur is not. This makes them a cost-effective option for staffing a business.

The majority of France’s employment legislation is designed to meet the needs of traditional employment relationships. Accordingly, the ambiguous status of gig operators has been left to the ruminations of legal minds to decipher. French courts have refused to grant worker, ie employee, status in cases involving Chauffeur Prive, Deliveroo and Take Eat Easy, despite factors of training, provision of equipment and exclusivity in service. Yet in January 2017, a driver working for LeCab, won the right to be classified as a worker. The case turned on the fact that his contract contained an exclusivity clause which prevented him from acquiring his own customer base and engaging with competitors. The question now is whether this ruling has wider implications for others in the gig economy.

UK Law

Employment legislation in the UK has expanded beyond that of its continental cousins to create an additional category of “worker”. Workers enjoy fewer rights than employees but have key entitlements, including, importantly the right to receive the national minimum wage, paid holiday and pension rights under the automatic-enrolment pension rules.

In recent cases, judges have confirmed worker status for those performing services for Uber, Addison Lee, CitySprint and Hermes. Nonetheless, in the 2017 decision of IWGB v Deliveroo, the Central Arbitration Committee noted, in line with the Supreme Court judgment in Autoclenz v Belcher, that its task was to find the true agreement of the parties. Therefore the appropriate question was what the contract between Deliveroo and its riders actually achieved.

Whilst case law provides an interesting backdrop, it is also the crux of the gig economy issue. As highlighted by Deliveroo, and LeCab the fact-dependant nature of each case means that there is no easy classification of service providers. This lack of certainty is one of the primary weaknesses of the current framework of determining an individual’s employment status.

Suggestions

France

In France, new rules have been created which seek to broaden the concept of the entrepreneur. One of these is that of the “auto-entrepreneur”. This refers to people working on their own as individual entrepreneurs, as opposed to salaried staff, or as employers in their own right. For individuals who earn less than €33,000 per year, “auto-entrepreneur” enables them to deviate from the main business tax regime and has more flexibility in terms of social insurance contributions.

UK

In 2016, the Taylor Review was commissioned to consider possible alterations to existing employment status categories. The report cited a number of regulatory approaches to the challenges of the gig economy including codification of existing case law, the right for individuals to request a more permanent and stable contract and the right to receive a clear written statement regarding employment status.

Outside the legislative sphere, a compromise is being attempted. UberEats has launched free accident and sick pay insurance for its riders in nine European countries, including the UK. Models such as this may become more common considering the state of uncertainty in the judicial and legislative landscape.

In both jurisdictions, these changes suggest a desire to grant service providers access to certain benefits which their employment status would not otherwise provide, but it remains to be seen whether or not this will reduce the number of challenges to employment status.

Summary

The gig economy does not fit neatly into the world of UK or French employment law. Gig economy workers enjoy the flexibility that their work offers, but there are serious concerns that they could be subject to exploitation. Inevitably then, the debate as to how we can preserve flexibility, whilst ensuring that individuals receive better treatment, is set to continue.

Nicholas is a senior associate in our Corporate team.

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