Employee status: traditional or a sharing economy?

What do Uber, Deliveroo and Airbnb all have in common?

They are all large businesses that don’t employ a workforce in the same way other businesses have done traditionally. Since their arrival we have seen a significant switch away from employing people to do the jobs organisations need and want them to do to the gig or sharing economy. This is the fastest growing business sector the modern world has seen. It is where partners are invited to become self-employed independent contractors providing services with an increased flexibility to work when they want.

One of the largest of this type of business has at least 30,000 drivers in the UK and a global value of approximately $62.5 billion. They and other similar types of companies claim to be able to offer people the flexibility and control to work when and how they want. This claim is now being challenged in the UK courts with some drivers claiming the reality of working for these companies is that they are employees as such should have certain workers’ rights.

There are a number of similar cases against employers in the bike courier industry whose couriers are claiming the same. 

Deciding how to categorise employees

Employee status is at the heart of these cases and broadly speaking it falls into three categories: 

1. employee;
2. worker; or
3. independent contractor. 

Categorisation is important as it leads to a certain set of rewards and protections, such as holiday pay and national minimum wage. Many of the gig contractors are now claiming they fall into the category of worker and should receive these associated benefits.

These developments make us continue to think that the light still continues to shine bright on employee status in this country. Employers should continue to keep a close eye on the correct employment status of its workforce.

If in doubt about employment status an employer should review the labeling of its workforce to make sure that the title is still the reality. This has always been important and these latest cases are a reminder that in today’s ever evolving working landscape it should still be a high priority.

Please contact Steve Sweetlove or your usual RSM contact.