What is the gig economy?
An economy in which people work small jobs instead of or as well as one full-time job. Giggers are paid for the amount of work (gigs) they complete. The gig economy has risen in the wake of the digital revolution. Companies operating under this model (Uber, Deliveroo, Etsy and Air BnB to name but a few) operate on the basis that their Giggers engage with consumers by selling products or providing services via websites and mobile apps.
How many people are currently working in the gig economy?
It is estimated that there are currently 5 million giggers in the UK.
Why is the gig economy so appealing?
It differs from the traditional office based Monday to Friday working model. Giggers can work (to an extent) wherever and whenever they want. This flexible working model appears well suited to the millennial generation; those that have witnessed tough market conditions and high unemployment rates and therefore have been encouraged to become their own bosses. The desire for a better work/life balance must also not be forgotten. From a company’s perspective, the gig economy creates flexible working arrangements meaning companies need only pay their Giggers when work is available.
Why is there so much focus on the gig economy at the moment?
The gig economy is raising questions about workplace protections, as it does not fit the traditional employment model which has been established over the years. Under the traditional model, you are either classified as being self-employed, a worker or an employee. It is important to establish which employment status attaches to giggers, as this will vary the employment rights they can expect to enjoy.
The issue of employment status was bought to light in one of the biggest cases of 2016; Aslam and others v Uber BV, Uber London Ltd and Uber Britannia Ltd.
Uber argued that the platform they provide merely connects Giggers with the consumers and therefore no employment relationship existed. The Employment Tribunal disagreed stating that Giggers were in fact workers, as Uber controlled the fares, routes, instructions and feedback. As workers, the Giggers should receive workers rights which include benefiting from a minimum of 5.6 weeks’ paid annual leave each year, a maximum 48 hour average working week, rest breaks, the national minimum wage and the national living wage.
From a taxation perspective, companies operating within the gig economy may be evading their social security obligations by not paying proper tax and national insurance contributions. Ultimately, the wider general public end up footing this bill with the Office for Budget Responsibility estimating that the gig economy will cost the Treasury £3.5bn in 2020/21 in lost tax revenues. This could be perceived as unfair given that companies such as Uber are worth $62.5bn.
What does the future hold for the gig economy?
Various reviews and inquires have been launched to investigate the gig economy. This includes the Taylor Review which will look into the change of working practices in recent years and how workers rights can be married up with employer freedoms. An inquiry into the future world of work has also been launched by the Business, Energy and industrial Strategy Committee.
It should be noted that the issue in relation to working models is not a new problem. The area is riddled with case law and principles which can sometimes make it difficult to determine the employment status of individuals. In recognition of this, a Working Group on Employment Status has been set up to review how the employment status of an individual is determined. This is with a view to moving towards an agreed set of tests which can be applied to determine employment rights and tax.
From a tax perspective, the Treasury Committee is calling for evidence and views from interested parties about the threat to income tax and national insurance as a result of changing working patters. Additionally, the Office of Tax Simplification will be publishing a paper in due course which focuses on the issues and implications that arise from the gig economy.
Paige Tompkins is a trainee at EMW Law