Shilpen Savani participates in the IR Virtual Series – Shock Of The New: What is the impact of the gig economy on the traditional workplace?
Foreward by Andrew Chilvers
Whenever the gig economy comes up in conversation, app-based technology companies such as Uber usually get a mention as the emerging business models for ‘gig’ workers. And while these new ‘gig’ business models are changing the way people work, many jurisdictions are resisting the changes taking place.
Back in the pre-COVID-19 days of 2019, two London-based Uber drivers sued the company claiming they should be classified as workers and given a minimum wage, holiday pay and other benefits due for company employees.
They argued that Uber was a proper taxi company employing drivers to provide a service for customers. Uber employment rules included standardised routes and fares, similar to any employer-employee relationships, and driver standards and conduct, under the Uber brand banner. Indeed, they said if drivers failed to keep to these standards their driver accounts would be deactivated, essentially sacking them like any other company.
Meanwhile, Uber argued that it was not a taxi company but rather an app-based software company providing a direct contact (via the app) between the driver and the customer. Simply put, the app helps freelance employees gain customers and the company’s terms of business state that drivers work for themselves. They are not obliged or indeed contracted to work solely for Uber. An employment tribunal upheld the taxi drivers’ claims, while Uber was set to appeal the decision.
The issue of companies such as Uber and Deliveroo as employers of gig workers and drivers of the gig economy is a talking point the world over. The debate goes well beyond taxi and delivery services and highlights the fundamental shift now happening in the modern workplace. This shift eschews the traditional nine-to-five office hours in favour of employment based on often casual, remote working underpinned by digitisation. Above all, it’s a generational shift based on technology, as our members discuss in the following pages.
The recent resurgence of the gig economy can be seen as an extension of the technology revolution in the workplace. Does the gig economy offer benefits that older models of employment lack?
I agree with Francisco that the engagement which we’re having with the gig economy has sprung out of technology and I think it’s inseparable from smart phone mobile technology that we’re dealing with. It’s also true that there’s a generational aspect to this in the sense that it seems the current generation prefers flexibility over job security. Employers in the coming months will be considering every viable way of working.
Short of dismissing employees or as an alternative to losing employees, basically that will result in zero-hour contracts. If that means part time working, job shares and more self-employed workers one way or the other, we’re going to see a diminishing of the traditional, permanent form of working and more adoption of technological support.
The COVID-19 pandemic has brought the issue into sharp focus. It was happening anyway, but even the most sceptical employer today thinks flexible working is viable and has probably recognised in recent months that it is viable through connectivity and even enhanced without necessarily having longterm fixed employees at a fixed location.
As employers see the benefits of the gig economy in terms of cutting the costs of social security payments, pensions and health insurance, how important is it for companies in different jurisdictions to understand local legislation and court precedent?
There’s no question that jurisdiction is extremely important here. The technology that we’re talking about that’s changing the workplace means that it’s easy to forget borders and to forget extra considerations. This type of flexible working is seen in different ways, depending on where the work is taking place and that’s compounded by the fact this is a fast moving space, more so than ever before given the sort of economic recess that’s been forced on most countries because of the pandemic.
Listening to all of us just emphasises the differences that apply to every jurisdiction we consider. Looking at the English context, there’s a tax consideration that is whether a worker is self-employed or an employee. For tax purposes, it’s a binary choice but from a legal perspective there’s the third status of worker and that gives you few protections in terms of minimum wage, in terms of the rights to holiday etc.
Depending on whether you are an employee or whether you’re a worker makes a big difference because the employees have a right not to be unfairly dismissed. They have entitlements to redundancy payments and they have much clearer and more extensive maternity and parental leave rights, which self-employed workers generally don’t have.
I think the gig worker status is here to stay. This sector doubled between 2016-2019 in the UK. At the start of 2016 one in 20 workers was involved in the gig economy. This became one in 10 by 2019 and it’s continuing to grow.
What is the gig economy’s impact on employment patterns in different jurisdictions?
I agree with Laura. I think that as the concept of traditional job security diminishes, the attractions of the flexibility that comes with the gig economy are limitless. That flexibility works on both sides and it really helps not only workers but also businesses that can benefit from flexibility and the ability to extend their resourcing as and when they need it, but without the huge overheads that come with a static workforce.
The overarching context of all of this is really important. This is that work as we knew it may never return. In that context what was previously a relatively small growth area developing out of the workplace is about to become bigger than ever before.
It doesn’t surprise me that the freelance sector is growing in the US, particularly when we see what’s happening there. What is it now? Nearly 40 million unemployed without access to healthcare. Personally, I cannot believe the lack of social support in the US. When I hear that one of the most liberal and socially minded countries like the Netherlands is looking at social policies to assist the selfemployed, the contrast is stark.