Are new working models in the “collaborative economy” failing to honour employment status?

29 September, 2016

While advances in technology have supported a rapid expansion of self-employment in the “collaborative” or “gig” economy, a numberEmployment - cyclist of high-profile test cases are challenging the working models adopted and arguing that the individuals engaged should be treated as employees or workers, with the range of employment rights which either status confers.

Taxi drivers and delivery drivers

Judgment is awaited following the Employment Tribunal hearing in July in a test case brought against the online taxi business Uber. The drivers are claiming that they should be treated as employees, and asserting rights to holiday pay, sick pay and minimum wage.  Uber considers its drivers as self-employed “partners”, with the freedom to determine their hours and to work with complete flexibility.

In a class-action lawsuit in California and Massachusetts, rulings have been made against Uber that its drivers were employees rather than independent contractors. A $100 million settlement was rejected by a federal judge as unfair to the drivers in view of the value of their potential employment claims.  In France the social security authority has taken legal action against Uber to reclassify its drivers as employees, in order to claim social security contributions.

The courier company Hermes is facing an investigation into its working practices by HM Revenue & Customs following an investigation by The Guardian that its self-employed contractors, who use their own vehicles to deliver parcels on piece-work rates, are being paid less than the national living wage.

Cycle courier cases

With the backing of the recently-formed Independent Workers Union of Great Britain, Cycle couriers are bringing a series of test cases in the Employment Tribunal against courier companies including Excel and City Sprint. The cycle couriers are aiming to establish their status as workers and so their rights to paid holidays, sick pay and the minimum wage. The first of these cases is due for hearing in November.

The online food delivery company Deliveroo has experienced industrial action and negative media coverage for its attempts to impose self-employment contracts on its riders and to replace hourly pay rates with payment per delivery.

A trade union for foster carers

In a related development, this month saw the formation of the first trade union for foster carers. The heart of their concerns is their legal status, since they are typically engaged by local authorities on a self-employed basis.  As well as the absence of employee and worker entitlements, they have little redress when their engagement is ended or their registration as foster carers is withdrawn. Earlier appeal cases have held that foster carers are not workers or employees since their relationship with the local authority is governed by statute, rather than by contract. 


Organisations whose business model is built around their “on-demand” freelance workforce will need to study carefully any developing trends in the current wave of test-cases about employment status. In the longer term, new legislation may be required to bring employment law up to speed with new working models in the digital and collaborative economy.

These organisations should also recognise the stigma and damage to their corporate brand which may result from the perceived exploitation of freelancers and evasion of employment obligations in the gig economy. They may wish to consider instead developing their workforce strategies to treat these individuals as employees and to provide positive support and engagement accordingly.