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Gig Economy - Significant Reform Proposed

The Deliveroo chief, Will Shu, stepped up to the mic last week and claimed the company wants to give their delivery staff benefits such as sick pay and injury benefits but can't.

Deliveroo is one of a number of high profile businesses operating in the gig economy that have been accused of unfair working practices - exploiting the cyclists and motor scooter riders who work for them by not providing benefits or job security.

Whether Mr Shu's, well timed, press offensive setting out the businesses desire to offer sick pay and injury benefit to riders is any more than damage limitation - something to point to should the Taylor review (due to be published tomorrow) be critical of the companies heavily involved in the gig economy - is open to debate.  However, he raises an interesting point.  Shu claims that existing employment laws prevent his business from offering benefits, and that if they did, they would put the flexibility, which the rider's value, at risk.

Not surprisingly the unions don't see a problem with giving benefits.  The General Secretary of the TUC, Frances O'Grady, criticised Mr Shu's announcement saying "Plenty of employers are able to provide genuine flexibility and security for their workforce.  Deliveroo have no excuse for not following suit."

But who is right - Mr O'Grady or Mr Shu?  Clearly they are coming at it from two very different standpoints.

What it comes back to is the way that employment tribunals currently assess employment status, and the additional rights (and business costs) that flow from that.  Much publicity has been given to the successful claims made by Uber drivers and others engaged in the gig economy who have been declared to be "workers" rather than self-employed.  However, cases on employment status turn on their own facts and while one rider may meet the statutory definition of worker, it is quite possible that many others will not.

Those who rely on businesses such as Deliveroo for their primary source of income and make themselves available for work on a full time basis are more likely to meet the statutory definition of worker than those who use this type of work only as a top up to their regular job elsewhere and who dip in and out of it on an infrequent basis.  If recent reports are to be believed, the majority of gig economy workers fall into this latter category. As employment tribunals will take into account the benefits received by individuals in assessing whether they are workers or not, one way of reducing the likelihood of individuals being found to be workers is simply not to offer any benefits (such as holidays and sick pay).

And what about Mr O'Grady's point that other employers provide flexibility and therefore Deliveroo should do too?  In the first instance, we don't know if he is comparing like for like when making this statement.  Do the businesses he refers to provide the same degree of flexibility that Deliveroo does?  Or is he really talking about part time or shift work where there may not be a requirement to clock in at nine and finish at five but there is still a fixed pattern of work.  The gig economy is run on the back of technology which allows for complete flexibility in terms of when an individual works and when they don't and it's likely that Mr Shu would argue that that is a completely different business model.

So what is the solution to this trade off of flexibility and benefits?  When it is published tomorrow the Taylor review is expected to call for the introduction of a new category of worker called a "dependant contractor". Dependant contractors, who are likely to include those working for Deliveroo, Uber and similar gig economy businesses, will, in terms of what is proposed, be entitled to holiday pay, sick pay and be covered by some of the minimum wage entitlements.

So will this ensure that the relationship between dependent contractor and the organisation that they work for a fair one? As ever, the devil will be in the detail and it remains to be seen whether, if implemented, dependant contractor status will be a platform for the successful modernisation of employment law that keeps employers, workers and unions happy.