Update on the “gig economy” and assessing employment status

Technology enabled enterprise is redefining our conception of the “traditional” employment relationship.  Corporations such as Uber and others have pioneered highly successful business models that harness the technology of mobile broadband, GPS and online payment to connect users and providers of a service using “digital platforms”. Such companies are said to operate within the “gig economy”, a term which entered the lexicon in 2015 and has been defined in the Oxford dictionary as: “a labour market characterised by the prevalence of short-term contracts or freelance work as opposed to permanent jobs.”

Review

The potential shift in labour force dynamics has caused concern in industry and in government. The UK, Parliament recently published a report into “self-employment and the gig-economy.” The Report can be accessed here. "Theresa May also appointed Matthew Taylor to look at how employment practices need to change in order to keep pace with modern business models. His report was finalised recently and is available at the following link: https://www.gov.uk/government/publications/good-work-the-taylor-review-of-modern-working-practices. In Ireland, whether the growth of the “gig economy” is of sufficient concern to warrant a similar policy response remains an open question. However, the Workplace Relations Commission recently requested the Economic Social and Research Institute to produce a report on the topic, which is due to be released towards the end of this year. 

"Worker” Status -Aslam, Farrar and Others v. Uber

There has been a lot written on the topic recently following a UK Employment Tribunal finding last year that two drivers, using the app provided by Uber for connecting drivers with potential customers, met the definition of “worker” for the purposes of relevant employment protection statutes (see link to judgment). The Tribunal’s analysis revisited some of the familiar principles by which employment status tends to be assessed; principles which also apply in this jurisdiction:

(a) Mutuality of obligation. Whether there was an obligation on each party in the relationship. The Tribunal concluded that there was mutuality of obligation when the Uber app was turned on, but perhaps not when it was turned off.

(b) Instruction, management and control. The Tribunal concluded that Uber runs a transportation business, interviews and recruits drivers, controls key information, sets the route, fixes the fare, and instructs drivers how to do their work. On this basis, considerable control existed. The level of control in any given case is likely to be particularly important.

(c) Ability to make a profit. The Tribunal noted that Uber claimed to assist drivers to “grow” their business, but they observed that “no driver is in a position to do anything of the kind, unless growing his business simply means spending more time at the wheel”. 

(d) Substance over form. The Tribunal concluded that “the question in every case is...what was the true agreement between the parties” rather than what was recorded in writing. 

Uber has been granted permission to appeal and the appeal is expected to be heard by the UK Employment Appeal Tribunal (EAT) over two days, beginning on 27 September 2017. The Uber case highlights that technology enabled business models are capable of rapidly disrupting established ways of doing business, transforming our conventional notions of the employment relationship as they do so, and it will be interesting to see if the UK EAT agrees with the assessment of the Tribunal at first instance. 

“Employee” Status – Ireland

While there is no reported case in Ireland dealing with similar technology, the questions arising in respect of employment status are not new. The Courts in Ireland have considered the classification of workers in numerous cases over the years. The analysis tends to be very fact specific, but the basic tests to be applied should be the same whether the worker in question is described as a “gig” worker, freelancer, atypical worker or self-employed. Mutuality of obligation, control and the ability to make a profit are particularly important factors, as is evident in the leading Irish superior court cases - Henry Denny & Sons v Minister for Social Welfare [1998], Castleisland Cattle Breeding Society Limited v Minister for Social and Family Affairs [2004] and Minister for Agriculture and Food v Barry [2008]. 

The Barry Case

The long running saga of the Barry case is evidence of how difficult the assessment can be. The case involved the status of five temporary veterinarian inspectors, working at a meat processing plant in Co. Cork, who claimed they were employees when they lost their jobs in 2004. The case, which has been ongoing for well over a decade, was recently heard for a third time by the Employment Appeals Tribunal, after two outings in the High Court and one in the Supreme Court. In the latest instalment, the Tribunal found that the veterinary inspectors were not employees as there was not sufficient mutuality of obligation (Original case reference RP237/2005, MN354/2005 & Others, most recent judgment dated 29 March 2017. See also report in the Industrial Relations News 16 27 April 2017). However, those fearful that the Tribunal’s decision might be the final episode in this long running series, fear not, as we understand that a challenge to that decision has already been lodged in the High Court. 

The “Worker” Category

The existence of a middle-ground “worker” category differentiates the statutory position between Ireland and the UK in this area. The drivers in the Uber case were deemed to be “workers”. Such persons are neither employees nor contractors, and the categorisation attracts limited employment entitlements, for example in the area of minimum wage, paid annual leave and rest breaks.  While the term “worker” is to be found in Irish employment legislation it is defined in different contexts, and the term does not denote the existence of similar employment entitlements to those available to “worker[s]” under UK legislation. For example, the Protected Disclosures Act 2014 provides certain reliefs for “worker[s]” (the definition is broader than employees) who are penalised for making a protected disclosure, but it does not have a more general application. In the absence of a recognised middle-ground “worker” category in other employment legislation in Ireland, adjudicators may well be less inclined to classify users of internet platforms as employees.

The “False” Self-Employed Worker

On 7 June 2017 the Competition (Amendment) Act 2017 was passed into law, which introduced two novel categories of worker in Ireland: the “false self-employed worker” and the “fully dependent self-employed worker” (see link). The 2017 Act is intended to remove perceived obstacles to certain categories of self-employed individuals being represented by a trade union for the purposes of collective bargaining. It achieves this in part by de-classifying such workers as “undertakings” for the purposes of competition law.  It is difficult to know whether this type of classification will have a wider application in Irish employment law in future, but it is easy to foresee workers and trade unions adopting the terms and the definitions in the 2017 Act for the purposes of challenging “self-employed” status.

Concluding Comment

Organisations providing services through a platform such as an app, or employers who supplement their workforce by engaging contractors need to think carefully and take advice about key factors such as mutuality of obligation, the desired span of control, and the ability of the user of the platform to make a profit from their enterprise. While detailed contractual agreements are important, engaging in complex legal drafting purely to deny the existence of an employment relationship, where such exists in reality, is unlikely to be of any avail.  
Contact us

For advice on employment status, and structuring your contractual relationship with contractors, contact Emmet Whelan, Partner from the ByrneWallace Employment Law Team.