Guest Post: A Third Category Is Not The Right Path for Gig Workers – A View From The UK

Hannah Reed works on employment and labour law policy for the UK Trades Union Congress (TUC).  She is currently attending the Harvard Trade Union Program

The recent Uber case in the UK was hailed by unions as a monumental victory, securing basic ‘worker’ rights to rest breaks, paid vacation time and the national minimum wage for 30,000 Uber drivers in the UK.

The decision is certainly welcome and may have useful implications in the US.  But no one should presume that the issue of rights for gig workers is now settled or that legislators are off the hook. The case will be appealed.  Uber continues to argue its drivers are self-employed and that the tribunal decision would require it to adjust its business model.  The current ruling is also not binding for other groups of gig workers.

The intense media interest in the case has, however, helped to reignite policy debates on who should qualify for which statutory employment rights and whether protections should be extended to those working on the edge of the labour market.

Following pressure from unions, think tanks and civil society groups, the UK government has commissioned a review into modern employment practices.  The House of Commons Business Committee has similarly launched an inquiry into the Future World of Work and Rights of Workers.

The central question for both reviews is the whether the law needs to be modernised to respond to the new ‘gig economy.  Despite the rapid expansion in temporary, insecure employment and complex supply chains, UK employment law remains wedded to the notion that permanent, stable employment is the norm.  Those that do not meet this norm are simply not protected.

But whilst some US commentators are advocating the creation of third category of worker in response to the growth of the gig economy, the opposite debate is starting to take place in the UK.

Employers’ lawyers are calling for the law to be simplified, whilst the TUC is pressing for the UK to move away from the current three-tiered approach for who qualifies for which employment rights.

This may seem surprising given unions’ success in the Uber case.  But there are also downsides to the UK’s approach:

  1. The creation of a three-tier workforce: The self-employed have few rights at work basically health and safety protections.  Those classified as workers fare slightly better with rights protecting pay, working time, paid holidays, protection from discrimination and some union rights.  However, core protections including job security rights, familyfriendly rights and protection from arbitrary treatment are reserved for ‘employees who also tend to be entitled to benefits associated with stable employment, such as enhanced sick pay and pensions.  In contrast, individuals engaged in more ‘flexible’ forms of work bear all the risk.  Their employment can be terminated at a moment’s notice, they have no guaranteed hours and are not entitled to redundancy pay if work dries up – leaving them with no money for household bills until they find another job.  While they are better protected than the self-employed most importantly being entitled to a minimum wage – it’s hard to argue that these workers are receiving the working rights they need.
  2. Multiple tests generate confusion: As the Law Society has argued The very existence of a separate category of ‘worker’ creates uncertainty. As a result many people have no clear idea of their true legal status…. Currently, the only way to resolve this uncertainty is to take disputes to the employment tribunal.”  This creates costs for employers and workers. And without the support of a union, no individual is likely to take a claim due to new tribunal fees introduced in 2013 and for fear for future victimisation.  
  3. Employers can avoid their responsibilities by classifying individuals as self-employed, even though the legal reality may be very different.  The Uber case provided a very clear example of such practices.  The Tribunal stated that: We are satisfied that the supposed driver/passenger contract is a pure fiction which bears no relation to the real dealings and relationships between the parties’ and ‘It is not real to regard Uber as working ‘for’ the drivers … the only sensible interpretation is that the relationship is the other way around.’

In response, the TUC is calling for a return to a two-tier system which ensures that all economically dependent workers, including those in the gig economy, benefit from the same floor of workplace rights.  It should make no difference if they are allocated work via an agency, an online platform or via an app installed on their smartphone.  Failing this, the TUC will call for job security and family-friendly rights to apply to workers.

But extending coverage of statutory rights is not enough.  Tougher enforcement is also vital, through better resourced labour inspectorates. UK experience also reveals unions can play a crucial role in holding companies such as Uber to account and in securing improved working conditions.  Rather than contesting the case, Uber should meet with unions to negotiate a sensible solution which accommodates both its business needs and respects the rights of drivers.