What it will take to truly transform the ‘gig economy’

In the wake of the Employment Tribunal ruling against Uber, we should bear in mind the limitations of the law and Parliament’s involvement. Transforming the ‘gig economy’ will require a collective effort in reimagining our institutions and the ways in which we can shape the future of work.

Uber’s business model in the UK recently came under fire after an Employment Tribunal ruled that two drivers should be classed as workers rather than as self-employed. For the drivers, it was a long-awaited victory validating their concerns about the company and the level of control it exercised over them and their peers while providing little security. For Uber and other gigging platforms in the UK, it was a warning about their own precariousness in the market.

What does the Uber verdict mean? 

We should take a moment to consider what the verdict means. The drivers made a bid to be classed as workers (technically referred to as ‘limb b’ workers) which is a little known third category occupying the space between self-employed and employee. Agency workers often fall under this category, which entitles them to the national minimum wage, paid holiday and sick leave, and the right to a safe workplace.

However, it does not protect them against unfair dismissal or extend the security of redundancy pay. ‘Workers’ do not have the right to request flexible working arrangements or guaranteed time off during emergencies. There is no provision relating to training and development, which means that platforms may be hesitant to offer this if it can still be interpreted as a benefit only accorded to full-fledged employees.

Recent history shows us that workers under this category continue to be badly exploited by employers. Guardian and Buzzfeed investigations into the workplace practices of Sports Direct and Asos revealed that ‘workers’ were effectively paid below the minimum wage and that the target culture discouraged them from taking regular toilet or water breaks. This doesn’t mean that because workers under this category have fewer rights and are still at risk of exploitation  the drivers’ victory was in vain, but we should  recognise the limits of our law and how difficult it can be to enforce.

We will need to go beyond the courtroom to transform the ‘gig economy’. In a complementary post to mine, my colleague Nicholas Bull draws on his background as a barrister to explain why the legal system is often an inadequate and inefficient mechanism for realising change.

This isn't to say that the law has no role in bringing about useful change. For example, we might consider reversing the evidential presumption or burden of proof to deter companies from misclassifying their workers as self-employed. The former might mean that an individual is defined as employed unless they meet criteria for self-employment. The latter would place the onus on employers rather than any other litigating entity, such as the worker (for example, the drivers in the tribunal case) to demonstrate an employee was self-employed.

Parliament also plays a part as the tax and welfare systems will need rethinking to guard against bogus self-employment claims and to strengthen the safety net for workers and the self-employed alike.

Innovation outside the legal system

So laws and their interpretation matter, but we must also grasp opportunities to innovate outside our legal and political systems. The US is schooling us here – for instance, in the past year or so, we’ve seen the roll out of more portable benefit platforms, which offer insurance and long-term health and retirement coverage, so workers can move freely between platforms.

Partnerships have been formed between platforms and unions, including one between Uber and the International Machinists’ Association, leading to the creation of the Independent Drivers’ Guild to better protect, support, and above all, empower workers in New York City. The Guild is seeking more transparency and accountability from Uber, for example, by ‘securing a seat at the table’ with authorised management in monthly meetings with a Council of Drivers and ensuring that there is protection against deactivation through hearings in front of independent panels.

There has also been a surge of 'platform co-op' activity, including Juno, a ridesharing platform directly competing with Uber and Lyft in the US by substantially improving the offer for drivers. Significantly, Juno is a commercial and co-operative hybrid, offering drivers equity ownership. Its founders have set aside a pool of restricted stock for drivers that they say is equal to their own shares; the more fares a driver picks up, the more Juno shares she can earn.

The Juno model has the potential to completely reorient businesses in the gig economy; Rachel Holt, the Head of Uber’s North American operations, recently gave an interview in which she disclosed that Uber has been looking into giving stock options to its drivers and that they are watching Juno to learn whether such an offer will work.

Innovation and partnership are key to shaping the future of work, so that it is fair and sustainable. Ultimately, it is through collective action that we will be able to strike the right balance between autonomy and security in work. Resolving questions such as what constitutes self-employment under employment law or according to HMRC are important but we must keep asking bigger questions.

• Is it possible for gig work to be genuinely empowering?
• What can we all, including platforms and civil society, do to ensure that it is? 
• How can the courts and Parliament aid us in our ambitions so we can play a leading role in transforming the gig economy into what we want it to be?

These questions and more are currently being explored through the RSA’s research programme on gig work. 

_{Brhmie Balaram is a Senior Researcher in the RSA’s Economy, Enterprise and Manufacturing team. She leads the RSA’s research on the sharing economy. She has experience exploring issues of institutional reform, economic inequality and labour market disadvantage.}