If one company caught the zeitgeist in 2015 then it’s probably Uber, the app-powered taxi-booking firm. It has become the leitmotif of the “gig economy”, attracting enormous coverage and popularity as well as a fair amount of hostility.
A key source of tension concerns its relationship with its drivers: are they right to be treated as so-called partners, in effect self-employed contractors, or are they really employees with workplace rights?
Get ready to hear a lot about this in 2016. Lawyers around the world are busy working on it. The answer will not affect only Uber, it could shape the future of the on-demand economy.
A recent ruling in California determined that an Uber driver should be viewed as an employee and a wider class action is under way. In the UK, the GMB union is bringing a similar case on behalf of drivers, arguing they are wrongly being denied workplace rights such as the minimum wage, paid leave and rest breaks. Their lawyer, Nigel Mackay, says Uber is in effect an employer controlling hiring, firing and paying drivers as well as shaping key elements of their work such as charging and routing.
Whichever way the judgment goes, there is an underlying question as to whether flexible “gig” forms of work fit neatly into traditional categories of employment law. Some maintain that our existing framework remains fit for purpose: strip away the gee-whizzery of online apps and the underlying legal issues that determine whether someone should be treated as an employee or a contractor are unchanged.
Others disagree, arguing that technology platforms are enabling workers and consumers to come together in new ways that alter the character of the employment relationship and challenge our policy and legal framework: 21st-century technology is racing ahead of 20th-century institutions.
That’s exactly the debate that has just ignited in the US. One spark was a call last month from a powerful coalition of progressive tech leaders, unions and philanthropists calling for the creation of a new and flexible system of worker protection based on portable benefits. Another was this week’s landmark vote by Seattle city council permitting self-employed drivers to unionise – the first US city to do so and a move that will be contested by Uber.
All this comes alongside a heavily publicised proposal for the creation of a system of worker protection for the gig economy by two Democrat big hitters – Alan Krueger, a former chair of the White House’s council of economic advisers, and Seth Harris, a former labour secretary. It argues a hybrid category of “independent worker” is needed to accommodate situations in which an “employer” exerts control over much of what a worker does at the same time as the individual retains the right (like the self-employed) to work as much or as little as they want, when they want.
The conclusion is that a raft of established rights should be extended to the on-demand workforce: compulsory employer contributions for healthcare, the right to organise a union and anti-discrimination laws, and so on. Controversially, however, it also argued that – as with the self-employed – the minimum wage should be waived on the basis that the nature of on-demand work often makes it very hard to reliably measure hours undertaken.
Whatever your take on the exact proposal, the underlying objective – ensuring that any gains to society arising from gig-type activity reflect genuine innovation and service improvement, rather than regulatory arbitrage at the expense of workers – is surely the right one.
The US debate does not, of course, translate into the UK’s very different legal and welfare system – for instance, we already have an intermediate status for so-called workers falling between employees and the self-employed, though whether it any better suits the realities of gig-type working is unclear.
For now, we remain in limbo as we wait to find out whether Uber will facedisruption, in the form of a verdict forcing it to comply with workplace rights. Meanwhile, like the US, we should be thrashing out the underlying questions.
Might it be possible to craft forms of protection that give greater security to gig workers without destroying desirable features of these new business models? Or would any gains be outweighed by the risk that larger numbers of other workers, in traditional sectors, get shunted into any new, less protected employment status? Ill-judged reform could mean more levelling down than up.
The gig economy is much smaller than the hype suggests. As it matures out of its noisy, insurgent phase it needs to find a better accommodation with the workers that power it. Right now, this takes the form of efforts to apply traditional employment law. In time, new forms of protection and worker organisation will be needed. Just as business faces an imperative to innovate, so too do those who believe in social protection.
Gavin Kelly is chief executive of the Resolution Trust. Previously he ran the Resolution Foundation after a long stint as a senior adviser in Downing Street and Whitehall.
