Shock Of The New:

What is the Impact of the Gig Economy on the Traditional Workplace?

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.

At this point it’s probably worth analysing what exactly is a gig worker and the gig economy generally. Gig workers, as most people understand the term, are people who work on small jobs, commonly referred to as ‘gigs’. These ‘gigs’ are often their only form of income or are on top of their fulltime employment. In almost all jurisdictions, their employment status is confused and causes intense debates among tax officials, legal advisors, employment experts and trade unions.

To complicate matters further, with the digital transformation of many organisations the term ‘gig worker’ is starting to refer to more than just casual workers.Young millennials, for example, are adapting technology to suit their shifting workplaces and their lifestyle choices. As our members suggest, these young people are digital nomads and can work anywhere at any time. A designer can work on a logo in London and it’ll be ready for the customer to use on packaging in California the following morning, for instance.

Elsewhere, e-commerce entrepreneurs are using online platforms such as e-Bay and Facebook business pages to sell products and services to global customers. As a result, the term ‘gig worker’, as narrowly used to describe casual taxi and delivery workers, can actually apply to huge areas of modern digital business culture.

Everywhere the gig economy develops, legislation in different jurisdictions attempts to play catch up to understand how gig workers fit into the economic lifeblood of the nation – often trying to put a square
peg into a round hole. How are gig workers regulated? Are gig workers entitled to state benefits, pensions and paid annual holidays? Uber’s defeat in the employment tribunal in London last year would indicate that individuals, businesses
and legislators are still trying to understand and define the gig economy. Above all, companies using a casual structure as a business model may have to start providing certain employment rights for their gig workers.

Furthermore, new legislation in various jurisdictions calls into question the very idea of a gig economy, which is by its nature unregulated. The Netherlands, for example, is a robust liberal economy, but has no place for an unregulated, casual approach to employment that is at odds with its traditions of social, civic and welfare regulations.

To add further complexities to the discussion, the COVID-19 pandemic recently shone a new light on the gig economy and gig workers as people had to adjust to home working, social networks and technology for their income. And, by and large, this was a hugely successful experiment at new working practices.

In almost all jurisdictions a lot of work needs to be done to close the gap between legislation, gig workers and the gig economy. During the next few years workers and businesses alike will need more clarity on the status of gig workers in the gig economy. But one thing is for sure, gig workers and the gig economy are both here to stay. Indeed, gig working could well be the new normal way of working for many people – and legislators will need to understand that.

The following discussion took place between x7 IR Global members who are experts in employment law. Their wide-ranging discussion on the gig economy addresses several questions, through the lens of employment law, concerning the impact of the gig economy on traditional working practices.