The Gig Economy and Worker Rights

emily gordon brown
Emily Gordon BrownLegal Assessment Specialist @ Lawhive
Updated on 26th June 2024
gig-economy-and-worker-rights

Without a shadow of a doubt, the gig economy is reshaping how we work and live. As of 2024, the UK gig economy workforce is now estimated at 1.7 million workers and 1 in 6 adults in the UK currently work a gig job at least once a week from ride-sharing drivers to freelance designers.

For many gig workers, the siren song of being your own boss is undeniable. However, when it comes to worker rights and protections this new way of working comes with significant challenges, especially regarding uncertainty around income stability and lack of benefits like holiday pay and pensions.

In this article, we'll explore the key issues surrounding the gig economy and worker rights. In particular, we'll look at the legal landscape, examining what protections exist for gig workers under UK law and how recent court cases are shaping the future.

Whether you're a seasoned gig worker with a specific question in mind, or simply considering joining the 1.7 million gig workers in the UK, this guide will provide you with the knowledge to thrive in this dynamic, brave new world.

What is the gig economy?

The gig economy is a modern approach to employment where individuals work as freelancers, independent contractors, or temporary workers, often on short-term projects (gigs).

Unlike traditional full-time jobs, gig work (in theory) offers flexibility and autonomy, allowing workers to choose when, where, and how they work, in a wide range of jobs from ride-sharing and delivery drivers to freelance writers, graphic designers, and consultants.

The rise of digital platforms you're no doubt familiar with like Uber, Deliveroo, Fiverr, and Upwork has fueled the gig economy's growth, making it easier than ever for people to find gig work. But it's not without its complexities, especially when it comes to employment law, which we'll explore later in this article.

What are the pros and cons of gig work?

For employers

Pros

Cons

Cost savings

Lack of loyalty

Access to talent

Gig workers aren’t committed in the long term

Flexibility

Worker misclassification can pose legal problems for businesses

Scalability

Less control

Increased productivity

Communication challenges can arise, especially when workers are in different time zones

For gig workers

Pros

Cons

Flexibility and autonomy

Lack of job security

Diverse opportunities

Lack of benefits and protections

Quick extra income

Income uncertainty

Remote work

No employer loyalty

Earning potential 

Overwork/burnout

What are workers' rights in the gig economy?

The gig economy often blurs the lines between traditional employment and freelance work, raising important questions about workers' rights.

One of the most contentious issues is the classification of workers. Gig workers are often classified as independent contractors who may not be entitled to the same benefits and protections as employees, such as minimum wage, holiday pay, and statutory sick pay.

Right to fair pay

Even as an independent contractor, you have the right to be paid fairly for your work. This means receiving the agreed-upon rate for your services, free from unlawful deductions.

In some cases, if you are classified as a worker rather than an independent contractor, you may also be entitled to the National Minimum Wage or National Living Wage.

Right to a safe working environment

You are entitled to work in a safe environment and, if you are injured on the job, you may have the right to seek compensation through a personal injury claim.

Right to protection from discrimination

Gig workers are protected under the Equality Act 2010, which prohibits discrimination based on protected characteristics.

This means you have the right to work free from harassment or unfair treatment based on age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex, and sexual orientation.

Right to written terms

You are entitled to receive written terms outlining the nature of your working relationship, the rate of pay, and other key details.

Right to collective bargaining

In some instances, gig workers have successfully challenged their classification and gained the right to collective bargaining. This allows workers to negotiate terms and conditions collectively, rather than individually, potentially leading to better pay and working conditions.

As this new landscape has evolved, recent legal developments have begun to address the rights of gig workers. Landmark cases, such as those involving Uber drivers, have highlighted the need for clearer definitions and protections.

How can I determine my employment status as a gig worker?

In the UK, there are three main categories of employment status:

  1. Employee

  2. Worker

  3. Self-Employed (Independent Contractor)

Key factors to consider

Employee

Worker

Self-Employed

Level of Control

The company has a high degree of control over how you perform your job, including working hours and methods.

There is some control, but less than for an employee. You might have some flexibility in how you complete tasks.

You have full control over how, when, and where you work.

Mutuality of Obligation

The company should provide work and you should accept it.

There is some mutual obligation, but not as strong as for employees.

There is no obligation for the company to provide work or for you to accept it.

Integration into the Business

You are fully integrated into the company, often involved in team activities, and subject to company policies.

You may be somewhat integrated but maintain a degree of independence.

You operate independently, often providing services to multiple clients.

Provision of Tools and Equipment

The company provides the necessary tools and equipment.

Sometimes, the company provides tools, but not always.

You provide your own tools and equipment.

Financial Risk and Opportunity for Profit

You have little to no financial risk and are paid a salary.

You may have some financial risk, such as not being paid for sick leave, but it is limited.

You bear the financial risk and have the opportunity to make a profit based on how you manage your business.

To determine your status, you should carefully read your contract or terms of engagement and reflect on your day-to-day working relationship with the company.

It is important to know your employment status because it impacts:

  • Your rights to minimum age, holiday pay, and sick pay;

  • Your tax obligations;

  • Your entitlement to workplace protections.

What should be included in a gig work contract?

Even as a gig worker, it's important to have a contract in place that protects both your interests and that of the company you serve.

An effective gig work contract should include:

  • The nature of the relationship, specifically whether the gig worker is an independent contractor, freelancer, or consultant;

  • A description of services or tasks;

  • Expected outcomes, including deadlines and milestones;

  • Start and end dates;

  • Conditions under which the contract can be terminated by either party;

  • The notice period required for termination by either party;

  • The payment amount and schedule;

  • Confidentiality and non-disclosure clauses;

  • Intellectual Property clauses.

A well-drafted gig work contract protects both the gig worker and the company by clearly defining roles, expectations, and obligations.

At Lawhive, our network of experienced solicitors can help you create comprehensive gig work contracts tailored to your specific needs. Contact us today to schedule a free case evaluation and receive a no-obligation quote for our services.

The most common issues and disputes in the gig economy include:

Misclassification

The government is addressing the growing problem of employment status misclassification in the gig economy and the related worker rights issues. Gig work exists in a gray area between being classified as a worker and being self-employed, and the legal criteria for determining status are complicated.

Employers often prefer to classify gig workers as self-employed due to the tax benefits and fewer obligations. However, this will change with new rules starting on 31st January 2025.

Recent legal cases, like those involving Uber and Lyft, have set important precedents for how to handle these classifications. Another significant case, Pimlico Plumbers Ltd v Smith, saw the Supreme Court rule that Gary Smith, a plumber, was a worker rather than self-employed. This decision meant he was entitled to worker rights such as the national minimum wage and holiday pay.

Pay and benefits

There have been numerous disputes about wage levels, holiday pay, and access to benefits for gig workers.

In response, the Government published guidelines to help individuals and businesses understand gig workers' employment rights.

These guidelines clarify gig economy workers' rights to the national minimum wage and paid leave, and they also highlight that gig workers can seek additional work if they wish.

Termination and notice

Employers must have clear Independent Contractor Agreements when terminating an independent contractor.

These agreements should outline the terms, the individual's employment status, and tax arrangements. If gig workers are denied holiday pay, they can claim a 'rolled up' sum upon termination.

Intellectual property

Disputes can arise in the gig economy during short-term project collaborations. In a fluid freelancer-employer relationship, there is often ambiguity in ownership, leading to questions about the rights over work produced during gig contracts.

Clear agreements should be in place so both parties know who owns the intellectual property as, without these agreements, companies may claim ownership of something they don't own or relinquish ownership over their intellectual property.

Additionally, gig workers often have multiple clients, which can lead to disputes when more than one client claims ownership of a piece of work.

How can I resolve a dispute over pay or benefits as a gig worker?

To resolve a dispute over pay or benefits as a gig worker, start by looking at your contract or terms of service, paying particular attention to clauses related to payment terms and benefits. Ideally, your contract or agreement should set out these terms in black and white, providing a clear path to resolving the dispute.

However, if taking up the matter with your employer or platform doesn't solve the issue, you should seek advice from Acas or a solicitor. Both can provide guidance on your legal rights and the best course of action.

In some circumstances, you may be able to file an employment tribunal claim to recover unpaid wages or benefits you are entitled to under the law.

What obligations do employers have towards gig economy workers?

Employers have several key obligations towards gig workers including:

  • Correctly classifying workers as either employees, workers, or self-employed contractors;

  • Paying at least the National Minimum Wage or National Living Wage, depending on the worker's age and status;

  • Calculating and providing holiday pay under the law for gig workers who qualify as 'workers;'

  • Ensuring that gig workers receive appropriate rest periods and follow working time regulations;

  • Providing necessary training, equipment, and measures to protect workers from health and safety risks;

  • Ensuring that gig workers are treated fairly and equally;

  • Providing clear and transparent terms and conditions of employment;

  • Giving gig workers the freedom to seek additional work without restrictions;

  • Having a process in place for handling grievances and disputes;

  • Complying with data protection laws.

Can gig workers claim unfair dismissal or redundancy pay?

Many gig workers, especially those working for popular platforms like Uber or Deliveroo, fall into the category of 'Workers' and, as such, don't have the right to claim unfair dismissal or redundancy pay.

Similarly, self-employed individuals or independent contractors are not entitled to unfair dismissal protection or redundancy pay.

That being said, recent legal cases have highlighted the complexities of employment status in the gig economy and have sometimes reclassified workers, granting them additional rights.

What protections are available for gig workers against discrimination?

Gig workers are protected against various forms of discrimination, including:

Therefore, gig workers who believe they have been discriminated against can:

  1. Raise a formal grievance with the company or platform they work for;

  2. File a claim with an employment tribunal within three months of the discriminatory act.

What steps should I take if I believe I have been misclassified as a self-employed contractor?

As we've established, misclassification can affect your employment rights, benefits, and protections.

If you suspect you have been misclassified, you should raise the issue internally with your employer to seek clarification on your employment status.

That being said, if you can't resolve the issue in this way, you should seek advice from an employment lawyer who can provide guidance on your rights and represent you in negotiations or legal proceedings if necessary.

At Lawhive, we understand the unique challenges faced by gig workers. Especially regarding worker rights and potential misclassification.

If you find yourself looking for legal advice as a gig economy worker, our network of experienced employment lawyers is here to provide expert advice.

Contact us today to schedule a free case evaluation and find out how we can support you.

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