Calling time on the gig economy?

Business, Economy | Thu 22 Dec | Author – Business & Finance

David O’Riordan discusses how UK Tribunal decisions could have far-reaching consequences for Ireland.

The explosion of the so-called ‘gig economy’, an environment in which temporary positions are common and organisations contract with workers for short-term engagements, has created new legal territory and Irish employment law has yet to catch up with it.

This new fluid, rapidly evolving economy is facilitated by a myriad of digital apps which blur the contractual lines between the various parties involved in providing a service or set of services. The need for greater clarity in this area has been apparent for some time but has now become acute as a result of a recent Employment Tribunal case in London involving taxi business Uber.

The London case was taken on behalf of two taxi drivers by their trade union, the GMB. The union argued that taxi drivers contracted to Uber are entitled to certain employee rights such as the minimum wage and paid holiday leave as the terms of their engagement meant that they were not actually self-employed contractors.

There is no test for establishing whether an individual is an employee in Irish legislation

Uber claimed the opposite and said that self-employed persons could not claim these rights.

The drivers’ case hinged on the definition of self-employed person. The GMB contended that the conditions of their contract with Uber meant that they should be classified as employees of the company. These conditions include penalties for failure to respond to customer alerts and an inability to pick and choose the jobs they do.

The Tribunal agreed and the decision could have far reaching effects not just in the UK but in Ireland as well.

It should be noted that the Tribunal’s decision only relates to the two drivers concerned and does not set a legal precedent. Uber has announced its intention to appeal the ruling in any case.

Should the decision stand, however, it is likely to act as a powerful influence in similar cases in the two islands. It could help finally clear up the murky definition of the term ‘worker’ and will likely have an effect on future WRC cases across all sectors of industry in Ireland.

It is probable that it will influence future determinations by authorities including the Department of Social Protection, the Revenue Commissioners and Irish employment tribunals when deciding whether or not a worker is an employee or a contractor.


david o'riordan

David O’Riordan

There is no test for establishing whether an individual is an employee in Irish legislation. In its absence, the courts and tribunals have developed criteria to determine employment status based on the reality of the relationship between the parties. Decisions are made on a case-by-case basis.

There is no test for establishing whether an individual is an employee in Irish legislation

For example, one recent decision saw workers defined as ‘employees’ on the basis that they were provided tools and clothing for the task undertaken, and importantly, that the individuals were not in control of the hours they worked or the type of work they performed.

This recent broadening of the term has brought the Irish definition of employee closer to that of the UK’s, so the Uber case could be highly persuasive in future Irish decisions, particularly so in the case of gig economy enterprises.

In its ruling the UK Tribunal stated: “It is, in our opinion, unreal to deny that Uber is in business as a supplier of transportation services.”

This was the crux of the matter. Uber contends that it is merely a match-making service – putting service providers in touch with service users at the times and places they are needed and at competitive prices. The company’s argument is that it goes no further than this and does not actually provide the service and therefore cannot be held to have an employment relationship with the service provider.

If that Tribunal decision is upheld in higher courts in the UK the impact could be profound. Similar services such as Deliveroo in the catering sector may find themselves having to redefine their relationships with their delivery drivers.

Ultimately, the decision may fundamentally undermine the business model on which these new services are based and cause a complete re-evaluation of the gig economy. Only time will tell.