Gig work as ‘good work’
Can gig work can provide the same level of social and economic security that traditional employment has?
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By Brhmie Balaram, Josie Warden and Fabian Wallace-Stephens
@brhmie | @THREADproject | @fabian_ws
This article is part 2 of the RSA’s report ‘Good Gigs: A fairer future for the UK’s gig economy’
Increasingly, there is thought being given to what is required to live a decent life. This is why Universal Basic Income (UBI) is a matter of debate for example. At a time of stark inequality and growing fears about the impact of technology, such as artificial intelligence and automation, we’re returning to questions about what is needed to enjoy a basic, yet decent, standard of living.
It is within this context that we can better understand the controversy over employment status in the gig economy. The surge in gig work signifies a shift in the way that people are working, which could ultimately undermine the foundation of social and economic security that underpins society and enables a decent life. The bedrock of security for most people is traditional, nine-to-five employment, which provides them with basic rights and protections, such as paid holidays and sick leave, and the ability to challenge unfair dismissal.
The state also depends on people being employed by at least one company, collecting taxes accordingly; employees pay a higher rate of National Insurance Contributions (NICs) and companies also pay NICs on behalf of each employee. While it may appear that the state rewards outliers through tax incentives for the self-employed, they are banking on entrepreneurs eventually creating many more traditional, full-time jobs for employees. The considerable rise in self-employment is now eroding our tax base, which is how we finance statutory benefits for employees, such as paid parental leave, and offer universal support for everyone in terms of healthcare and social welfare.
For those concerned that platforms are threatening our foundation of security, the starting point has been to challenge whether gig workers should be considered genuinely self-employed. They argue that platforms are exercising a greater degree of control over gig workers than experienced by other self-employed people, such as entrepreneurs or freelancers. On this basis, gig workers may be entitled to more rights and protections akin to those in more traditional working arrangements. There is an urgent need for an incoming government to clarify the law, and to deter misclassification of gig workers.
However, classifying gig workers appropriately under the law is just one way in which we can ensure that they enjoy a basic standard of living. While important, it is also limited in its potential to transform workers’ experiences of the labour market. The law will not guarantee that the work is fair in other ways that matter; for example, the law cannot guarantee gig workers more power over decisions that affect them or a greater share of the value that they’ve created.
Moreover, given that platforms operate in diverse ways and not all exercise the same level of control, it is unlikely that all gig workers have been misclassified. Thus, only some workers will stand to benefit from the rights and protections conferred by a different employment status. Taking into account the wider trend towards self-employment (which was well underway before gig work became prevalent), we also need to consider that more people are valuing a higher degree of flexibility than most employees have. This leads us to believe that traditional employment cannot be the basis of a secure foundation, but rather this should be built on a broader conception of good work for all, irrespective of employment status.
Another important role for government then becomes steering us in the direction of good work. Government must set out its vision of what good work looks like, so that technology is leveraged to provide workers with a better standard of living. Good work — which is not synonymous with traditional employment — is another way in which we can maintain a decent life even in the face of radical changes.
In this next section, we delve into the detail of the debate over employment status in the UK’s gig economy. This is also a matter of public interest given implications for tax and social security. Government’s role is set out in terms of clarifying the law, deterring misclassification of workers, and reimagining how good work can become a new foundation for many in society.
Part I: Understanding and defining employment relationships in the gig economy
Who is really in control?
Gig economy companies do not regard themselves as employers, but rather as intermediaries. In their view, they operate platform-based business models that match supply and demand through making connections between users. Anyone offering a service on the platform is generally free to do so according to their own schedule. These companies thus classify gig workers as self-employed, or as ‘independent contractors’, as opposed to employees. This is the source of most tension in the gig economy, and the employment status of gig workers in particular remains a grey area.
However, while the technology may be new, the tension here is not. There has long been debate about how to define employment relationships in the UK. At the crux of this debate is a question about how much control companies exercise over their workers.
Some commentators have suggested that when assessing the level of control that platforms exercise, we should focus on how much power workers are given over technology. By way of illustration, the entrepreneur Tim O’Reilly presents two scenarios and asks us which one would be more ideal from the perspective of a worker. In the first, only management in is control of data, using it to keep costs down and profits up. This might mean that they preside over a large pool of part-time employees or, more specifically, workers on zero-hour contracts that they keep on call for short shifts and use scheduling software, such as Percolata, to allocate hours. Percolata uses algorithms to build profiles of retail employees based on an analysis of their performance to date, combines this with weather, online traffic, and other signals to forecast customer footfall, and then produces a schedule with the optimal mix of workers to maximise sales for every 15 minute slot of the day.
In the second scenario, workers are independent contractors who can also make decisions based on data, using tools that help them understand and predict demand for their services. They are compensated in accordance with demand, and can choose how little or much they work to meet their individual income goals.
The first scenario is representative of low-wage employers such as retailers like Gap or Uniqlo, whereas the second is intended to portray the likes of Uber. By contrasting these scenarios, O’Reilly is arguing that the distinction between employees and independent contractors does not matter as much as whether or not low-paid, on-demand workers have agency over the technology that is used to manage their labour.
Of course, we are now aware that a platform like Uber also uses ‘algorithmic management’, programming different incentives to influence how their drivers work when they are logged in. However, it might be countered that the level of agency over technology that could satisfy a gig worker would be the ability to simply turn the app on when they want to work, or off when they no longer do. Ultimately, their employed counterparts do not have a choice over when to work.
Our survey results on the motivations of gig workers seem to support this in theory. When asked about why they were in gig work, more than half cited good conditions, including greater flexibility. 63 percent agreed gig work offered more freedom and control. This does not necessarily mean that platforms are exemplary in the freedom and control that they allow workers, but it does reflect a preference. The response is likely to be understood as a measure of how workers feel about gig work relative to other options in the labour market.
Yet, there is still a considerable minority of gig workers who do not agree that they now have more freedom and control.
As we observed in our last report on the sharing economy, it may not be enough for some workers that these platforms concede more power over technology. A full-time gig worker has fewer rights as an independent contractor than a full-time employee, for example.
Moreover, these workers may also find that such a concession does not make up for the other ways in which platforms still exercise control over them. The level of control exercised varies by platform; for instance, some may permit workers to set their own rates and accept jobs at their discretion, while others do not.
In a bid for more employment rights, gig workers are increasingly challenging their legal status in the courts. In the next section, we explore the arguments for reclassifying gig workers in the UK.
A ‘third way’ for workers
Gig workers have been disputing their employment status as far back as 2013 in the US, whereas the first challenge to come to light in the UK was in 2016.
The earliest case concerning employment status in the gig economy was a class action lawsuit filed against Uber on behalf of roughly 385,000 drivers in California and Massachusetts. The suit alleged that the drivers were being misclassified as independent contractors rather than as employees, and as such deserved compensation for expenses, such as gas and vehicle maintenance, as well as reimbursement for tips. The lawsuit was settled out of court last year for $100m (£80m), of which $84m was guaranteed to go to drivers; however, the amount of the settlement was overruled by the judge presiding over the case because it was far below the cost of potential damages(calculated at more than $850m, or £678m). It will be up to the parties to renegotiate or go to trial.
Uber faces more than 170 lawsuits in the US alone, but it is not the only platform to be sued. Similar action has been faced by rival ridesharing company, Lyft; delivery services Postmates, DoorDash, and Grub Hub, and cleaning platforms, Handy and Homejoy, to name but a few. All lawsuits in the US have so far been settled out of court rather than resolving the dispute over employment status.
Prior to Lyft reaching a settlement, it was suggested by the judge, Vince Chhabria, that California’s test for classifying workers was “outmoded” and “not very helpful in addressing this 21st century problem [of how gig work should be classified]”. He likened the case to a jury being “handed a square peg and asked to choose between two round holes”. There appears to be strong conviction that a ‘third way’ between independent contractor and employee is needed in the law, and its absence in the US may be why both parties have been inclined to settle in all cases so far.
However, the same cannot be said for the UK. We do not need a ‘third way’ because it already exists here. In fact, it’s possible for a ‘fourth’ or a ‘fifth’ way to apply in the gig economy — the UK recognises many more legal statuses under employment law than the US. In addition to self-employed and employee, there are the categories of a ‘worker’, ‘agency worker’, and ‘employee shareholder’.
It is this little known third way — the ‘worker’ category — that gig workers in the UK have been pursuing recently.
Working out who is a ‘worker’
‘Workers’ in the UK can essentially be understood as self-employed, but are extended some protections afforded to employees in recognition that they are not in business for themselves. They are sometimes known as ‘limb (b) workers’ (a reference to the legislation) or ‘workers in the extended sense’.
The ‘worker’ category emerged in the mid-1990s in response to EU legislation, as well as a shift in the labour market from permanent full-time employment with a single employer to more casual and flexible working relationships, sometimes with multiple employers. The category extended the scope of some key labour protections, so that ‘workers’ are covered by minimum wage legislation and working-time regulation. However, they are excluded from other statutory protections (for example, protection against unfair dismissal and redundancy) because they are not considered employees.
In a leading case before the Supreme Court in 2014, the judge, Lady Hale, clarified the meaning of a ‘worker’:
“…Our law draws a clear distinction between [employees]… and those who are self-employed… within the latter class, the law now draws a distinction between different kinds of self-employed people. One kind are people who carry on a profession or business undertaking on their own account and enter into contracts with clients or customers to provide work or services for them… the other kind are self-employed people who provide their services as part of a profession or business undertaking carried on by someone else.”
Clyde & Co LLP and another (Respondents) v Bates van Winkelhof (Appellant), (21 May, 2014) The Supreme Court [online] (PDF, 110KB)
Yet, ‘workers’ are relatively uncommon, perhaps because the category is defined by patching together various legislation — there is no single source that sets out the rights of a ‘worker’ and the circumstances in which they may accrue.
The existence of such a category is also not widely known. The nuance of the recent employment tribunal that ruled in favour of Uber drivers was lost on much of the mainstream media, which falsely reported that the drivers were now employees. The drivers had actually won the right to be classed as ‘workers’ in a test case against Uber.
The challenge was brought by James Farrar and Yaseen Aslam on the grounds that the control Uber exercised over them warranted protection as ‘workers’, which would entitle them to holiday pay, rest breaks and the minimum wage. The judges noted that in designating ‘worker’ status, it was relevant to take into consideration:
“…the degree of control exercised by the putative employer, the exclusivity of the engagement and its typical duration, the method of payment, what equipment the putative worker supplies, the level of risk undertaken, etc.”
The drivers were not claiming to be employees, but given the nature of their relationship with Uber they had reason to believe that they might qualify for some employment protections.
“The basic effect of limb (b) is, so to speak, to lower the pass-mark, so that cases which failed to reach the mark necessary to qualify for the protection as employees might nevertheless do so as workers.”
It was a landmark decision, and validates concerns that there is a problem with misclassification in the gig economy. However, we are still far from resolving issues of employment status.
From the outset, we should be cautious about assuming that anyone providing a service in the gig economy is a ‘worker’ rather than self-employed. Platforms operate in diverse ways, and not all exercise the same level of control as Uber has (or the extent of control that would merit classing users as ‘workers’). Grub Club, for example, connects skilled and amateur chefs with customers who are up for sharing dinner with strangers; although the platform charges commission, it allows chefs to host at their convenience and set their own prices. It is entirely plausible for platforms to devise business models premised on using self-employed labour, a point also made by the judges of the employment tribunal case against Uber (PDF, 3.5MB).
Moreover, criteria for assigning ‘worker’ status is not clear-cut, especially for the layman. It is right that the status of a gig worker is decided on a case-by-case basis depending on how the platform operates, but at present only courts seem to be in a position to assess this. Guidelines have not been established for determining ‘worker’ status, meaning that even platforms considering reclassifying their workers would not find it easy to make the change.
Given the lack of clarity, some platforms have claimed that they have been hesitant to offer training and development opportunities, concerned that this might be interpreted as a form of control. This is troubling since gig workers should technically be able to access training under existing law, and platforms profess that they want to do more to support workers if possible. Training and development is mutually beneficial for platforms and gig workers (for some, it could be the key to progression across, or out of, the gig economy).
If we’re able to muddle our way through working out who qualifies as a ‘worker’ and what they’re entitled to, we’re left with the question of whether this third way in the UK is sufficient as is, or if ‘workers’ require more protection in a changed labour market. For example, perhaps ‘workers’ ought to be owed the right to unfair dismissal if deactivation on a platform hinges on new rating and review systems for managing their performance.
Beyond that, it’s necessary to bear in mind that the employment status of gig workers has wider implications for tax collection, as well as for access to social security under Universal Credit. Even if more platforms class users as ‘workers’, this will not make much of a difference to the Treasury since ‘workers’ are considered self-employed for tax purposes.
In addition to protecting gig workers, changes must be advocated for to protect our tax base from being eroded by the gig economy.
Part II: Understanding the interactions between employment law, tax and welfare
Protecting public interest
Companies shoulder a share of the safety net through the taxes they pay. Most of us are aware that companies pay corporation tax, but other taxes are also levied, such as business rates for any property occupied and NICs on behalf of employees. Online platforms tend to have a competitive advantage because they don’t spend much on bricks and mortar (at the most, they rent an office, but they don’t require shops on a high street). Most platforms in the gig economy are also spared from paying Employer NICs because they class their workers as ‘self-employed’.
According to the Institute for Fiscal Studies (IFS), NICs are forecast to raise £126.5bn in 2016/17 (PDF, 770 KB), the vast majority of which will be Class 1 contributions, paid by both employees and employers. NICs are the second largest source of revenue for the government, behind income tax and ahead of VAT.
If Uber, for example, had to pay Employer NICs, tax lawyer Jolyon Maugham reckons that the platform would accrue costs of around £13m per month (or roughly £156m annually).
Some worry that the high costs of hiring an employee perversely incentivise companies to contract self-employed labour instead, and in some instances, to misclassify their workers. This may be a valid point, but to continue with the example of Uber, even if the company was to submit to the ruling that its drivers are ‘workers’, they would not be liable for paying Employer NICs because ‘workers’ are classed as self-employed under tax law. Increasingly, suggestions for how to rebalance tax burdens have been made, so that companies like Uber and their workers are paying a fairer share. The RSA has previously proposed different options for reforming the tax system, including:
Soft levelling — The self-employed begin paying the same personal NICs rate as employees (ie 12 percent rather than 9 percent), but Employer NICs remain unchanged.
Payroll tax plus — Employer NICs are reconstructed as a ‘payroll tax plus’, with companies paying a levy for all workers they employ or contract, including the self-employed, whether independent contractors or ‘workers’.
It’s likely that to address the tax problem in the gig economy, a combination of these options is needed. ‘Soft levelling’ would equalise the rate of personal NICs paid by employees and the self-employed, while ‘payroll tax plus’ would levy all companies — even intermediaries — with a form of tax for any type of labour employed or contracted. There may be other options, however; another option described by the RSA was to convert Employer NICs into a ‘transaction tax’ to be paid by the consumer — whether a household or a business — using the services of any kind of worker.
In general, the debate about tax in the UK seems to be heading in the direction of simplifying the tax system so that there are fewer distinctions made between the self-employed and employees (PDF, 520KB). While there may have been differences between employees and the self-employed in terms of entitlement to benefits, government has been closing this gap in recent years. In particular, with the introduction of the single-tier state pension, the disparity between the two has largely been addressed. Reforming taxes for the self-employed is also likely to affect how companies incur tax on behalf of their workers.
However, any changes to the tax system will require engaging the public in a meaningful consultation early on. We know this to be true given the aftermath of 2017’s spring budget. Chancellor Philip Hammond announced that NICs paid by the self-employed would be raised (to near parity) over two years, but had to back down on the reform following widespread backlash. The policy had merit, but its execution was poor, particularly because a package of enhanced support (ie maternity and paternity pay) for the self-employed was not revealed in tandem.
The government may have had more traction for reform if it had addressed the matter of appropriately taxing those who use self-employed labour instead of the self-employed themselves. As our survey shows, most gig workers (61 percent) are making less than the taxable threshold of £11,500, and nearly a third (31 percent) earn less than £4,500 from gig work. On a related note, this is why introducing a withholding tax (a tax automatically deducted at the time of transaction) as explored by the Office of Tax Simplification (OTS) would be similarly problematic, given that most of the money would need to be returned to gig workers after their tax returns were filed (and it would be unnecessarily punishing, restricting their immediate cash flow) (Employment Status report, London: Office of Tax Simplification, 2016, PDF, 1.65MB). Government is likely to see a higher return from the gig economy if they focus on those who rely on independent contractors. However, in future, government must take the public on a journey when pursuing policies that are likely to be unpopular, but are for the greater good.
A comprehensive approach to reforming the system
It should not be assumed that reconfiguring the tax system will also resolve the issue of employment rights (the theory being that companies will no longer see an advantage in classing gig workers as self-employed, as opposed to employees, if the tax incentive is lost). Given Uber’s resistance to classing drivers as ‘workers’, let alone employees, this would be a mistake. Uber is appealing the ruling not because of tax implications, but because it doesn’t agree that it needs to extend protections for workers in terms of health and safety provisions, or cover the costs of holiday pay, paid rest breaks, or the guaranteed minimum wage.
To square the circle here, addressing the two main challenges of the gig economy (protecting workers and public funds) will require effecting change in harmony. The ambition here should be to find ways to better support gig workers (under the law, but also irrespective of their employment status) and pursue an agenda of rebalancing responsibilities for tax.
However, we should be clear that while there is a need to think about the system more coherently, this does not necessarily mean that greater alignment is needed between employment law, tax, and welfare. There may be temptation here to introduce a third category in tax law, for example, to correspond with the ‘worker’ category in employment law and, likewise, to create a lesser form of Employer NICs for companies contracting ‘workers’. However, the risk is that this also creates perverse incentives to misclassify employees as ‘workers’. There is precedent for concern given the problems with enforcing IR35, a law designed to root out ‘disguised employees’ by challenging individuals who incorporate themselves as a ‘Personal Service Company’ merely to exploit tax advantages.
Rather, thinking about the system more coherently means making an effort to understand the interactions, or the knock-on effects, within it. This would, for instance, mean reflecting on why further simplifying the tax system by equalising, rather than further differentiating, treatment, might be a more effective response to the trend towards gig work over the long-term.
Or, similarly it would mean ensuring that we have fully thought through how all legal statuses under employment law are accounted for in the tax and social security systems. For example, it is not clear at present whether ‘workers’ will be considered self-employed under Universal Credit (UC), the new system of welfare that is being rolled out in the UK. A ‘Minimum Income Floor’ (MIF) is being introduced under UC to deter under-reporting of income, which will mean that a claimant’s income is assumed to be a certain amount each month and that any fluctuations below this will not be made up for with more social security contributions. The MIF was designed with entrepreneurs in mind, or essentially, people in business for themselves rather than ‘workers’ who are integrated into another’s business. Clarifying their path under UC would make a big difference to ‘workers’, and might also impact on public spend.
We map out the different legal statuses applicable in the UK’s gig economy and related employment rights, taxes, pension contributions, and treatment for social security purposes under Universal Credit. The point of this exercise is to illustrate how complex our system is, and to help readers begin to understand how all of the different components intersect and might interact. Again, ‘workers’ are not necessarily in need of a distinct path under UC, but at the very least it should be clarified whether they will be treated as self-employed or as employees.
Deterring misclassification of gig workers
Providing greater clarity of the law for platforms and workers
A number of reviews and inquiries have recently been undertaken by the current government and specific departments, as well as the Opposition, to address the challenges of modern employment, including how to respond to issues of legal status in the gig economy. A possible outcome of these reviews might be a total overhaul of employment law, or even the tax system. At the very least, issues such as the treatment of ‘workers’ under Universal Credit are likely to be settled.
As a starting point, however, both platforms and workers need more clarity about what sort of rights and protections come under the different categories. Assuming an incoming government allow the completion and publication of the review on modern employment, chaired by Matthew Taylor, it should release an official guide to aid both businesses and workers in navigating employment and tax law.
We recommend that the new government:
- Publish an official guide to aid workers and businesses in identifying different employment rights and related tax obligations.
This could serve as a simple online resource for businesses considering classifying their workers in a different way. It would also enable workers to identify their rights to hold businesses to account, as well as their tax obligations.
Platforms are uncertain about whether extending workers certain benefits, such as training and development opportunities, would alter their employment status.
The government should thus make the following clear at the earliest opportunity:
- Specify that employment intermediaries can offer training and development opportunities, and to any category of worker.
Some platforms, such as Uber, do offer training (courses in English language proficiency, for example) and others have noted they would like to do more, but that they are concerned that this might be interpreted as a form of control, akin to that of an employer rather than an intermediary.
There is no currently no indication that employment intermediaries cannot offer training, and to any status of worker, but in the absence of clear provision gig workers are missing out on opportunities to further develop skills which could lead to progression.
Given that training and development is beneficial for companies and workers alike, it needs to be made explicit that employment intermediaries, such as agencies and online platforms, can offer workers this support regardless of their employment status.
There may be other changes that an incoming government wishes to make to the specific employment categories or to the tax system following the Taylor Review. This government may not have been able to change NICs for the self-employed because of its manifesto pledge, but all parties might omit such a pledge in their upcoming manifestos. The new government should indicate the direction of travel for a sustainable tax policy in the UK. It’s unlikely that an incoming government will abandon the agenda of equalisation between the employed and self-employed, but it will need to be clear how it will pursue this and what its priorities are.
We strongly recommend that when it comes to changes in tax, government should:
- Use deliberative methods to consult with the public on any proposed changes to tax law.
After the current chancellor’s difficulty in reforming NICs for the self-employed, it is clear that public buy-in is needed to make substantive change to taxes. Deliberative methods might be useful for communicating the complexity of the matter and engaging the public in a different, and more meaningful, way. For example, the RSA is currently testing deliberative methods through our Citizens’ Economic Council — a programme of research and engagement advancing economic democracy.
Renegotiating the balance of power over employment status
There are discrete changes that could be made to the law that would nudge us towards a fairer system, especially for workers, without requiring a complete redesign. In a system where businesses are essentially gatekeepers, able to unlock more employment rights by classing workers in particular ways, workers could be more empowered to question how they are classed. This would hopefully both deter companies from misclassifying workers in the first place, and support workers in realising their rights if they suspect they have been misclassified.
Businesses, too, may be in favour of these changes because the recent spate of misclassifications has meant that even those who are legitimately classifying workers as self-employed are also coming under fire.
We recommend the following reforms to the legal system:
- Strengthen penalties against companies using clauses in contracts that prohibit litigation over employment status. Moreover, give explicit protection to workers who litigate the matter.
Some contracts in the gig economy have been issued with clauses prohibiting workers from taking legal action concerning their employment status. Ultimately, judgments about employer status are made based on the nature of the relationship rather than what is stipulated in the contract. These clauses are thus unenforceable, but they may discourage workers from making a valid claim, particularly because some also specify that the worker will incur the company’s legal costs if a claim is raised.
While these clauses were also made void under Section 203 of the Employment Rights Act 1996, which stipulates that workers cannot be prevented from bringing a claim to an employment tribunal, companies should be actively discouraged from violating the law through a penalty, such as a fine.
Similarly those same workers could be given explicit protection when a claim is made for worker/employee status that they should not be unfairly treated.
- Suspend tribunal fees for workers challenging their employment status.
The employment tribunal system was created in 1964, but the first fees for individuals making a claim were introduced in July 2013. Since then, individual claimants have had to pay fees of up to £1,200 to issue their claim and to have it heard. Some allowances are made for claimants who have little in capital and are on a low income, but qualifying for these allowances is difficult. As a result, there has been a sharp decline in the number of claims made — within the first year of fees, claims dropped by 80 percent.
For any worker wishing to challenge their employment status, the fees should not be a barrier. Misclassification is a live and critical issue, and workers should not bear the brunt of costs to clarify the law. These test cases are ultimately of public benefit, and thus warrant waiving fees for workers.
To reclaim costs, courts could require employers found in breach of the law (ie misclassifying workers) to pay an additional fine to subsidise the cost of the system. The fine could be determined on a sliding scale, based on the size of the company and its revenue.
There is a case to be made for abolishing tribunal fees in general. Fees were introduced to deter vexatious claims and to subsidise the cost of running the tribunal system. However, Abi Adams and Jeremias Prassl have found that there was scant evidence to suggest that the system was overrun by unmeritorious claims in the first place, and that the introduction of fees has had little, if any, impact in deterring the small proportion of vexatious claims which exist ( Adams, A. and Prassl, J. (2017) ‘Vexatious claims: Challenging the case for employment tribunal fees.’ Modern Law Review (forthcoming)).
- Introduce a summary process for workers wishing to challenge employment status at a tribunal.
There has long been a practice in civil courts of allowing parties to ask for a summary judgment when appropriate (ie when the case is clear-cut). Tribunal rules could be modified to allow for a summary process, or essentially a fast-track option, to give workers more immediate clarity over their status. This could be facilitated with a simpler claim form that makes it easier to understand whether a claimant is likely entitled to ‘worker’ or ‘employee’ rights.
- Reverse the burden of proof, so that the onus is on companies to prove that their workers are not ‘workers’ or employees.
In a legal dispute, one party is initially presumed to be correct and gets the benefit of the doubt; the other must bear what is known as the ‘burden of proof’. In cases before an employment tribunal, the claimant (usually, a worker, but sometimes a trade union or HMRC for instance) bears the burden of proof. In a case challenging employment status (which can only be brought to the court based on other claims, such as entitlement to holiday pay), claimants must prove that they are, for example, ‘workers’ under the law rather than self-employed. If the burden of proof was reversed, it would be assumed that the claimant was a ‘worker’ and it would be up to the company to prove otherwise. This may relieve some of the pressure that workers feel in bringing their case forward.
These recommendations could restore a sense of equilibrium in the system between businesses and workers while the broader question of employment status is grappled with in the gig economy.
Part III: Getting beyond the system with ‘good work’
It is important that gig workers are classified appropriately under the law and further misclassifications deterred. But we must also get beyond the system in thinking through how to support gig workers. The law has its limits, and we should recognise these so we can begin advocating for more than can be granted by the legal system. For example, the law cannot guarantee that a worker has meaningful prospects, nor does it enable workers to participate in making company decisions that affect them.
If gig work is to be fairer and more fulfilling, there is a need to consider what we value as good work just as the current government has begun to set out what they value as a good business. A more explicit link should be made between how workers fare in the gig economy and the government’s agenda to reform corporate governance, assuming this will also be a priority for the new government. Ultimately, this agenda is about urging companies to manage their businesses with more than just shareholders in mind, and to take into account the interests of workers and their communities as well, for example.
It is up to government to progress our conception of good work so that self-employed gig workers do not feel like they are less likely than ‘workers’ or employees to lead a decent life. We understand that what good looks like may vary by sector or the type of service provided, but we can also establish what good looks like for those who are finding work through online platforms specifically. For example, we can think about how platforms might build in progression routes or facilitate a form of ‘employee voice’ with the support of other institutions, such as trade unions.
The Scottish government has created a Fair Work Framework (PDF, 1.5MB), which sets out what it means by fair work, why it is important, who can play a part in making Scotland a world leading nation in fair work, and how this might be achieved. Similarly, the UK government could facilitate greater consideration of what good work in the gig economy should look like. As with the Fair Work Framework, there is a no need to be prescriptive; a principles-based approach could be taken, although there must also be thought given to how the principles might translate in reality.
For example, in principle, good work could:
- provide people with a sense of purpose and meaning
- enable freedom and control (ie more autonomy over working hours, when tasks are completed)
- give workers more of an effective voice
- offer opportunities to develop and allow scope for progression
- make the most of people’s skills, knowledge, and abilities
- promote work/life balance
- fairly compensate workers
At the RSA, we will be giving more thought to what good work might look like in both principle and practice in a forthcoming report. The intention is to move the dial forward in terms of thinking about what work, as well as what technology, is for, in more than just macroeconomic terms. The country may benefit from greater productivity and efficiency, but how does the worker benefit? Another way to think of this is: in what ways can platforms show workers that they value them?
In the next section, we explore the potential of peer-to-peer platforms in particular to become catalysts of good work.
