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Warning from Paris Smith solicitors to firms operating in the gig economy

By Karolina Skinner
6 May 2021

Following the recent landmark judgment against Uber in the Supreme Court, it was thought that the floodgates would open to further claims amongst gig economy workers. And just the other week, the Court of Appeal found that drivers for minicab firm Addison Lee should also be classed as workers and not independent contractors. This means they are entitled to the national minimum wage and holiday pay.

Charlotte Farrell, associate at Paris Smith

Addison Lee provided drivers with induction, training and documents explaining how they should do the job. They gave them hand-held computers to view their allocated tasks and there were penalties if they did not accept jobs immediately. There was no promise of work, but drivers were told they could expect up to 50-60 hours a week, which was regularly provided. Most drivers also hired vehicles from a company affiliated to Addison Lee. The Court of Appeal reinforced the views of the Employment Tribunal and the Employment Appeal Tribunal and found that the drivers were workers, and therefore entitled to the national minimum wage from the moment they logged on as ready to take passengers to the time they logged off.

This case is a further stark warning to businesses operating in the gig economy sector that their structures will be scrutinised and the courts aren’t afraid to look beyond the formal paperwork. There’s more to come, with a string of cases on employment status still waiting to be heard, including cases against Deliveroo, DPD group and Citysprint – all prominent businesses operating in the gig economy.

Charlotte Farrell, an associate in the employment team at Paris Smith solicitors: “This recent decision is another, really powerful example of the highest courts enforcing the protections in place for gig workers. Large employers operating locally in the gig economy need to review their current business models and contract terms with gig workers in response to this decision. In particular, they should consider:

  • Whether contract terms reflect the reality of the working arrangements in practice
  • If contract terms can be improved to help demonstrate self-employment
  • Can practical arrangements be altered to help demonstrate self-employment, for example giving gig workers more control over working arrangements?

Where there’s a strong risk of individuals being found to be workers due to similarities with the Addison Lee and Uber cases, employers should also consider whether the benefits of remaining in the gig economy continue to outweigh the risks – or whether moving to zero-hour contracts under which individuals are treated as workers from the outset may be more appropriate.

Where employers identify changes that could be made to rebalance arrangements with workers to ensure the relationship remains one of genuine self-employment, these should be implemented as soon as possible. As most status claims need to be brought within short time periods, acting now can help reduce the risk of claims and minimise the period for which individuals can claim for. There’s no doubt that the gig economy is going to be a hot topic well into 2022 and beyond.”

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