Workers and 'Heimarbeiter' status: gig economy square pegs and round holes

It is clear that the world of work is changing, perhaps faster than ever before. Not only might 'robots take our jobs', but some of the jobs that remain are becoming more transient, short term and task-focused. At Taylor Wessing, we are in the vanguard of advising innovative businesses in new work models – whether they are established market leaders or new entrants. We want to help conduct a debate about the future of work – which is why we recently held an international meeting in Munich – "Modern Work meets Rule of Law" – and support The Future Work Centre. Download their Four Futures of Work report.

The so called 'gig economy' is ever more newsworthy. Some celebrate the convenience and flexibility of gig-based working, while others fear the potential dilution or avoidance of employment rights. Businesses are blamed for failing to apply or honour certain benefits which accompany employment status, but those businesses dispute that status. Arguably a failure of employment laws to keep up to speed with the changing world of work, and the increasing difficulty of applying well established but entrenched legal concepts to changing working environments, are at least partly to blame for this dilution of rights.

The UK has seen considerably more case law dealing with employment status issues in the gig economy than most other European jurisdictions. Is this because the UK market is ahead of others, the UK legal structure is better suited to dealing with the issues, or might it be to do with 'workers' in less standard working environments being more vocal, supported and aware of the rights they are able to try and pursue? It is probably a mix.

The 'worker'?

In the UK, unlike most other jurisdictions, we recognise three different types of status for employment law purposes: employees; workers; and self-employed/independent contractors. This has been the case historically and worker status is not a symptom, nor attempted solution, to changing working practices such as those seen in the gig economy.

For someone to be a worker, an element of control must be held by the provider of work and there needs to be a requirement for personal service from the worker. To be an employee, a person will also benefit from and, be restricted by, a minimum level of 'mutuality of obligation' – an entitlement to be offered a certain level of work and a corresponding obligation to complete the work offered. People working for gig economy type businesses may well be the former, but not necessarily the latter – they are often not guaranteed any minimum level of work and need not do any work if they do not want, but when they are carrying out work, they may be controlled and be required to complete the work themselves (rather than delegating to or substituting someone else).

There have been around 15 recent reported tribunal cases in the UK which have analysed worker status. Many of these have been in the context of the gig economy and only a handful have been held in favour of worker status (with the courts seemingly considering this to be a convenient 'middle ground' between self-employment and employment, affording individuals a minimum level of employment rights protection).

The main cases that have been held in favour of the self-employed/independent contractor status have focussed on whether there is a genuine right to provide a substitute to carry out the work (ie where there is no requirement for personal service). The Taylor Review has suggested that the focus should be more on control than personal service, but the UK government has not yet indicated how this might be implemented (if at all).

Workers' rights

In the UK, workers are entitled to holiday pay, the national minimum wage and pension contributions, as well as other working time protections. Workers are likely to be categorised as employees for tax purposes.

Once one or more people are found to be 'workers', other practical considerations need to be dealt with, such as how working time, the minimum wage and holiday should be calculated when someone has worker status. There is lack of clarity on this at present, as few cases have reached as far as a remedies hearing where those issues would be determined.

In the Uber case (1) Uber BV (2) Uber London Ltd (3) Uber Britannia Ltd v (1) Aslam (2) Farrar (3) Dawson and others, the Court of Appeal found that waiting time (even when the driver is not actually on a trip) constitutes working time. This raises a particular issue regarding the concept of 'multi-apping'. If an Uber driver could simultaneously be logged onto, for example, Deliveroo and Lyft whilst waiting for trips, is he a worker of all three simultaneously and therefore entitled to three times the minimum wage and holiday accrual?

This is perhaps an extreme example, but it is a matter of fact that gig economy workers often make themselves available on multiple apps. So far it seems that case law and statute are not well equipped to deal with circumstances that deviate from a single master and servant type relationship. It will be interesting to see how the case law develops in this area.

How are companies dealing with these judgments in the UK?

Uber and Hermes, a courier firm, have both been the subject of judgments holding that their drivers/riders are workers for employment law purposes. Uber are appealing to the Supreme Court (UK's highest court). Hermes, in an interesting move, have entered into a collective agreement with a union representing their couriers to introduce the concept of 'self-employed plus' status, to which its couriers can choose to opt-in. This will involve the 'self-employed plus' couriers receiving minimum wage and paid holiday accrual, but they will still be treated as self-employed for employment law and, presumably, tax purposes. It remains to be seen how HMRC and the Pensions Regulator will respond to this, bearing in mind the Tribunal found that certain couriers should be deemed workers (which does not sit well with the idea of couriers only having the option to 'opt in' to a status which actually provides less protective rights than worker status). Whilst interesting and creative, it is another example of a square peg solution being squeezed into the round hole of employment status.

The Taylor Review has led to some incremental changes to the law and protections for workers, as set out in the Good Work Report. However, this review has failed to deal with big issues like the uncertainty of employment status.

As further insight, The Royal Society of Arts has also published the "Field Guide to the Future of Work", a collection of essays supported by Taylor Wessing. This offers a vivid, opinionated commentary from a number of experts in this area, including investors and researchers.

The "Heimarbeiter"

Germany also recognises an intermediate type of employment status: the Heimarbeiter. This bears some similarity to the concept of a worker in the UK, in that it is similarly not a new concept introduced in reaction to modern working practices, but is an old legal term currently undergoing a transformation through its increased application to new ways of working.

A Heimarbeiter is recognised as a person who carries out paid work in their home or from other premises of their choosing, which results in a product or service specified by and owed to the principal business.

Unlike the relationship between an employer and employee, there is a lack of mutual obligation between the principal business and Heimarbeiter (which deprives the Heimarbiter of achieving employee status). On the other hand, a Heimarbeiter neither owns nor operates a business, nor sells their products or services to customers, like the self-employed; they operate only on the instruction of the principal business.

Under German law, a Heimarbeiter is not afforded the same level of protection as an employee; they are entitled to the minimum wage, business expenses plus holiday and sickness pay. Much like worker status in the UK, the Heimarbeiter status has raised questions as to exactly how working time, the minimum wage and holiday should be calculated. There is also concern about the safety and welfare of the Heimarbeiter, who carries out work in an unregulated environment.

With the advance of the internet and technology, Heimarbeiter status has been increasingly used to facilitate working arrangements which the term did not initially envisage, provoking concern about working conditions. How the law will develop to catch up with changing working practices, and whether it will mirror the UK's approach, remains to be seen.

Technology taking over

Technology is increasingly impacting our working environments, not only in the UK, but globally. The 'rise of the machine' taking our supermarket checkout and call centre jobs, as well as the growing gig economy, are together leading to a more fragmented and transient workforce. The introduction of technologies, like employee microchipping, promise to make the working environment more efficient, while also raising concerns about data protection and human rights.

Can employers really demand that employees consent to a microchip being implanted under the skin to allow them to gain access to the office, print documents and pay for lunch in the work canteen? Probably not – at least for the time being – and there will always be the need for the old fashioned back up option of an entry card or password. On the other hand, are we not already carrying around microchips every day that could be used for these purposes, not in our bodies but in our pockets? Mobile devices or wearables seem the more logical (and less controversial) solution for seamless working practices, at least until we reach a point where implants become commonplace and usurp our addiction to our mobile phones.