Rachida El Johari participates in the IR Virtual Series – Shock Of The New: What is the impact of the gig economy on the traditional workplace?

Foreward by Andrew Chilvers

Whenever the gig economy comes up in conversation, app-based technology companies such as Uber usually get a mention as the emerging business models for ‘gig’ workers. And while these new ‘gig’ business models are changing the way people work, many jurisdictions are resisting the changes taking place.

Back in the pre-COVID-19 days of 2019, two London-based Uber drivers sued the company claiming they should be classified as workers and given a minimum wage, holiday pay and other benefits due for company employees.

They argued that Uber was a proper taxi company employing drivers to provide a service for customers. Uber employment rules included standardised routes and fares, similar to any employer-employee relationships, and driver standards and conduct, under the Uber brand banner. Indeed, they said if drivers failed to keep to these standards their driver accounts would be deactivated, essentially sacking them like any other company.

Meanwhile, Uber argued that it was not a taxi company but rather an app-based software company providing a direct contact (via the app) between the driver and the customer. Simply put, the app helps freelance employees gain customers and the company’s terms of business state that drivers work for themselves. They are not obliged or indeed contracted to work solely for Uber. An employment tribunal upheld the taxi drivers’ claims, while Uber was set to appeal the decision.

The issue of companies such as Uber and Deliveroo as employers of gig workers and drivers of the gig economy is a talking point the world over. The debate goes well beyond taxi and delivery services and highlights the fundamental shift now happening in the modern workplace. This shift eschews the traditional nine-to-five office hours in favour of employment based on often casual, remote working underpinned by digitisation. Above all, it’s a generational shift based on technology, as our members discuss in the following pages.

The recent resurgence of the gig economy can be seen as an extension of the technology revolution in the workplace. Does the gig economy offer benefits that older models of employment lack?

The concept of the gig economy and how to deal with it within a legal framework is a discussion that has been going on for many years in the Netherlands and the Dutch government has been trying to find a new legal framework to cover gig economy workers, but it has failed thus far. I think that the complexity from a Dutch angle lies in tax laws versus civil law.

Nevertheless, we have seen the gig economy emerge following the credit crunch of 10 years ago. At that time a lot of people suddenly lost their jobs but the difference between then and now is that the work was still there. The businesses were continuing to trade. The difference with the economy today or during this pandemic is that businesses have come to a standstill and that is the unprecedented aspect of it. It’s no longer the issue of employers taking advantage of the situation and transforming fixed-term employment contracts into a services contract where someone is no longer deemed an employee. The current situation does not work for gig workers – there are no gigs.

I don’t see a resurgence of the gig economy during this pandemic, but I do see that the pandemic has forced us all to work in a similar way to gig workers. That is remotely, more efficiently and with less instruction and authority from our managers or the structure of a company. We are all experiencing the daily life of a gig worker. We are output driven and more result focused.

As employers see the benefits of the gig economy in terms of cutting the costs of social security payments, pensions and health insurance, how important is it for companies in different jurisdictions to understand local legislation and court precedent?

In the Netherlands you have an employment contract and the criteria for it is codified in our civil code. This employment contract has three criteria, which are;

• there is work or a service that is being delivered or performed

• that in exchange some money is paid in whatever form

• and thirdly there is the element of subordination, which means that the employer or the party hiring the individual has the possibility to give instructions. Whether or not they do that is irrelevant. It’s all about whether they have that possibility or authority to do so.

There is no legal requirement to have a written legal employment contract based on how parties execute their verbal or written agreement in practice. Based on those elements a court or the tax authorities will decide whether there is an employment contract or not. So that’s the first important rule.

From these three criteria, you can say what is the work performed or service delivered. We can then establish if something is paid. But the third question is there or is there no subordination? How do you establish whether someone is being instructed? With Deliveroo or Uber, for instance, one of their most important arguments was that they do not give any instructions but the court said they have an app and an algorithm and the algorithm gives instructions. It is built in such a way that it forces people into certain actions. Workers have to check in the app. They have to take the order. They have to deliver within a certain timeframe. This algorithm concept acting as the actual virtual gig employer is a big issue. I am convinced the Dutch government will do whatever it takes to stop the expansion of gig economy workers.

What is the gig economy’s impact on employment patterns in different jurisdictions?

It is evident that the gig economy has had a huge impact on employment patterns. As I mentioned, there are already more than one million gig workers in the Netherlands and we don’t have that many people in the Netherlands.

I do think it’s a change that we cannot undo. Of course, there are certain benefits, but at the same time it is a development that will not continue to grow and evolve without boundaries or rules. Consequently, we are seeing limitations starting to be put in place and this will continue to happen.

The impact is important because it has shown us that we need to reinvent how we organise people and how companies and their business models embed the human factor. Young people and workers of the future want to do things differently. We don’t have a real answer to it yet. It also has a huge impact on government and the trade unions and this is extremely important. By law, in the Netherlands trade unions can only represent employees – what happens if a gig workers trade union was established? Trade unions see them as semi employees and do not want to lose them to an independent workers union. Consequently, it’s not only the government, but also the trade unions that are interested in this particular topic. I think the gig industry itself needs to come up with solutions. 

Contributing Advisors