Is the rise of the on-demand economy denying workers their benefits?

Blog
Employee Benefits and Wellbeing
Is the rise of the on-demand economy denying workers their benefits?

Booking a taxi, having a parcel delivered the same day, finding a cleaner, and ordering your favourite takeaway on the internet are all luxuries we enjoy thanks to the rise of the on-demand economy. But with the rise in demand, are workers being denied their benefits?

On the face of it companies like Uber, Hermes, Deliveroo and Hustle use technology to become the middleman; they hook up the workers with the customers and take a fee for doing so. They offer the people who choose to work for them a range of benefits including being your own boss, lifestyle working, the ability to supplement income and ultimately the freedom and flexibility to do what you want.

But where should businesses draw the line between self-employed and employed status?

Recently in a tribunal described as “the case of the year in employment law” 19 drivers who say they should be entitled to a range of employment benefits have taken Uber to court. They are arguing that because the drivers are rated by customers and are not told where customers need to be dropped off that they are not technically self-employed individuals.

In UK employment law there is a half-way between being a costly employee with full rights and a self-employed individual with no rights which is called ‘worker’.

The drivers are making the case that they are workers. So whilst they have fewer rights than employees, they should be entitled to the national minimum wage, holiday pay, the right not to be discriminated against and the right not to have deductions made from their salary.

What does it mean to be self-employed?

If you are self-employed you are in business of your own account and therefore might not be entitled to the same benefits as a regular employee. The distinction the law makes is that if you are an employee you fulfil the work yourself, and if you are in business you can send someone else. The idea that a taxi driver, a courier, or a cleaner who are contracted by a company to fulfil the job could send someone in their place is clearly problematic – for the business, and for the individual. And this will be one of the major distinctions set to come out in the tribunal no doubt.

Do self-employed individuals earn the National Living Wage?

It seems that issues surrounding technology companies of this ilk are popping up all over the place. The Guardian recently reported that a Hermes delivery driver claimed that as a self-employed courier he could earn as little as £5.50 an hour.

This arrangement is currently completely legal because the drivers are self-employed and are contractually paid per parcel; they are therefore not entitled to National Living Wage, pensions contributions, holiday pay or sick pay. But is it fair, are they really self-employed and should employment law protect them more?

Could this mean a change in Employment Law?

Later this year we expect to see four more tribunal cases against cycle courier firms Addison Lee, eCourier, Excel and City Sprint all arguing that the couriers are not genuinely self-employed. With the issue being so prolific in the media, it would be no surprise if more similar cases appear – and should the drivers and couriers win – the rules around this area of employment law may have to be reviewed.

One thing is for sure, advances in technology have meant that certain services become cheaper, others become quicker and more efficient, but we, as employers, have a responsibility to make sure the impact on our staff is a positive one.

We’ll keep you updated on these cases as they unravel here on our blog. And if you are a citrusHR customer, we send you regular legal updates and give you the HR support to ensure your business never falls foul of employment law.

Get HR Support

If you currently have self-employed contractors and you are unsure whether to offer them a ‘worker’ or an ‘employee’ contract, our HR consultants can help.

Get in touch on info@citrushr.com or give us a call on 0333 014 3888 to find out more about how we can help your business with friendly, expert HR support.