Editor’s Note: Elisa Chiaro is a legal consultant focussing
on Business and Human Rights and International Criminal Law. In 2016 she
completed an LL.M. at SOAS, University of London. Before that she worked for
five years as international corporate lawyer both in Italy and UK. She is
admitted to the Bar in Italy.
1.
Introduction
In current
discourse, the most pressing issues concerning human rights and business are often
associated with the developing countries to which manufacturing is outsourced.
However, the “western world” also faces new challenges as far as workers’
rights are concerned.
It is cheap and convenient for people to book a car ride or
order their favourite takeaway meal at a few swipes of their smartphone. App-based
service companies are thus very popular among consumers – and are consequently
flourishing. Conversely, some doubts have been cast on the fairness of the working
conditions of people contracted by these companies. A central issue in this
respect relates to the status of their workers, who on paper are self-employed,
but in reality are subject to the control of the company, a condition which
clashes with being independent. This post aims firstly to analyse the labour conditions
of gig economy workers in Europe, with a focus on some of the main service platforms,
namely Uber, Deliveroo, Foodora, and Hermes Parcels: the majority of these
companies, Uber in particular, are transnational, operating in many national
markets and adopting the same business model based on flexible work and lack of
security for workers in each market. Secondly, it will scrutinise how National
and European institutions and courts are augmenting gig economy workers’
conditions for the better. The issue is crucial in the UK, especially following
September’s decision by Transport of London (“TFL”) to reject Uber’s
application for a new London license, but legal disputes have also started in
other countries (in, among others, the UK, Italy and the USA). The UK
Parliament is also discussing the matter, and the EU Commission has started a
round table with trade unions and employers to find new solutions to address the
issue.
2.
Gig economy: flexibility vs security
The development
of new digital technologies, in particular ride-hailing and food delivery apps
easily accessible to everyone who possesses a smartphone, has
undoubtedly changed our lives. However this phenomenon also has some downsides
which are clearly visible in the context of the gig economy. Despite the fact
that, from the consumer’s point of view, these services are efficient (both in
terms of time and cost) and convenient, they have created a new category of so-called
workers “on tap”, as the The Economist labels
them.[1]
The term “gig work” was first used at the beginning of the 20th century
for jazz musicians who got their wage (“gig”) every night after their
performance. In 2009, the expression “gig economy” was adopted to describe
those who, during the financial crisis, started to engage in numerous part-time
jobs.[2]
A key company in the gig
economy is Uber. Founded in San Francisco in 2009, it is a ride-hailing app, and now
operates in 633 cities
worldwide. The European subsidiary of the American company is incorporated in The
Netherlands. The company maintains that in London, a focal hub of its business,
it has around 3.5
million users (this number refers to anyone who has used the service in
London in the period July-September 2017). Another important actor is Roofoods
Ltd, operating as Deliveroo, a London-based food-delivery company founded in
2013 transporting restaurant orders by bicycle, motorcycle or car couriers. It
operates in 12 countries and (as of September 2016) provides jobs to around 20,000
people.[3]
Foodora, a German company similar to Deliveroo, is involved in food delivery in
more than 260 cities worldwide and employs
around 22,000 people. Other significant companies in this space include parcel
delivery companies such as Hermes. The company runs a UK logistics and delivery
business, with around 2,800 employees and a network of 10,500 self-employed
delivery couriers who work on a day-to-day basis.[4]
These companies certainly
appear to be creating jobs: in London around 40,000
drivers work for Uber and, in 2015, Uber cars in New York outnumbered
traditional yellow cabs.[5]
Moreover, most of the services offered do not imply extra costs; on the
contrary, using these services can be cheaper than procuring them in more traditional
and longer-established ways.
The motto of most of the
companies mentioned above is “flexibility”, which is closely intertwined with
the fact that all of the people that drive or ride for them are self-employed. However,
where for some people being self-employed is a free and conscious choice motivated
by “autonomy and flexibility”, for others it constitutes a “necessary choice”
because they do not have another “traditional” job or, alternatively, because
their traditional job’s income is insufficient.[6]
Clearly
flexibility is not negative tout-court,
unless it is one-sided. It might be positive insofar as it allows for the
creation of potential new job opportunities benefiting more people, but it
might also become problematic if the model is adopted just to cut costs, and if
the level of control the employer exerts over its workers becomes too great. As
stated in the July 2017 Taylor Review of Modern Working Practices (“Taylor
Review”), drafted by an independent panel of experts upon the UK Government’s
request, “[b]eing able to work when you want is a good thing; not knowing
whether you have work from one day to the next when you have bills to pay is
not.”[7]
The crucial point goes as follows: describing the employment status of gig
economy workers as self-employed, while in reality their freedom is very
limited, will deprive them of some fundamental labour rights, such as sick pay,
holiday leave, and entitlement to the national minimum wage, among other rights.
3.
The UK approach: TFL decision and UK
Parliament enquiry
In the UK the debate surrounding
on-demand workers’ rights is very lively, and reached its peak with September’s
decision by TFL, openly supported by London Mayor Sadiq Khan, not to renew
Uber’s operating licence in London. The decision was justified due to Uber’s
“lack of corporate responsibility” but it focused specifically on issues linked
to passenger safety.[8]
However Sadiq Khan in his article published in The Guardian, supporting TFL’s decision, specifically stated that
the “regulatory environment is critical in protecting Londoners’ safety,
maintaining workplace standards for drivers […].”[9]The
company, following the apology
of the Chief executive Dara Khosrowshahi for its past actions, appealed
against the decision and in any case will continue operating until the appeal
decision is issued,[10]
as provided for in The Private Hire
Vehicles (London) Act 1998.
Many criticisms were raised against TFL’s decision: on one side by consumers (a
petition
to save Uber was set up and in a few days obtained more than 800,000
signatures) and by some drivers on the other. They claimed that, instead of
solving workers’ problems, the decision harmed Uber drivers and was just aimed
at protecting Black cab drivers, the majority of which are allegedly white and
English.[11]
The conditions of gig economy
workers, and in particular Uber’s drivers, were analysed back in December 2016 in
a report by MP Frank Field, titled “Sweated
Labour: Uber and the ‘gig economy’” (based on submissions from 83 private
hire drivers, the majority of whom worked for Uber). It concluded that despite
being self-employed, “[d]rivers cannot set their own fares, or choose which
jobs to undertake, for example. Many are totally dependent on Uber for their
income and they all must meet certain conditions to continue receiving work.”
Moreover the report stated that drivers are taking home around £2 per hour –
less than a third of the national living wage –
due primarily to the costs they have to bear, namely a vehicle that meets Uber
standards, plus refuelling and maintaining it. Interestingly, one of the
recommendations listed in the report was towards TFL, which was called on to
consider the abovementioned elements of the report when it came to renewing
Uber’s operating licence.
Even if some positive results
have been achieved (for example, in April 2017 Uber
declared that its drivers could sign up to a security scheme with the aim to
cover them in the event they were unable to work), working conditions are
still inadequate. This is clear from the findings of the UK House of Commons
Work and Pension Committee (“WPC”), which more recently scrutinised issues
connected to the gig economy. The WPC held that, instead of flexibility, workers
suffered “low
pay, inflexibility in working times, long hours, instability, and difficulties
in taking time off (such as for a holiday or for sick leave).”[12]
Specifically referring to the Deliveroo
contract, the WPC underlined how the company explicitly denied their workers
the right to present any claim to challenge their employment status (Clause
2.2).[13]
Moreover Clause 2.3 of the contract states that if, despite this Clause 2.2,
the worker presents any claim against the company, he/she “[…] undertake[s] to
indemnify and keep indemnified Deliveroo against costs (including legal costs)
and expenses that it incurs in connection with those proceedings, and [the
worker] agree[s] that Deliveroo may set off any sum owed to [the worker] against
any damages, compensation, costs or other sum that may be awarded to [the
worker] in those proceedings.”
Finally, in October 2017 the representatives
of Deliveroo, Uber and Hermes Parcels appeared
before the UK Parliament Business, Energy and Industrial Strategy Committee (“BEIS
Committee”) to give evidence and discuss, among other things, the Taylor Review.
The three representatives of, respectively, Deliveroo, Hermes and Uber, argued that
flexibility was crucial and benefitted riders and drivers. Specifically, Deliveroo’s
UK managing director claimed that at least 50 per cent of their riders were
students carrying out paid work alongside other activities, and
further stated that the additional labour rights for workers (if self-employed
contractors were to be recognised as employed) would lead to a company cost
increase of around £1 per hour of rider/driver time. Hermes director
of legal and public affairs asserted that the recognition of workers’ employment
status would cost the company around £58.8
million (given holiday pay, sick pay and National Insurance contributions).[14]
4.
The judicial response
So far many cases against Uber have been
brought before national courts on unfair competition claims: for instance in
Italy, UberPop
(the equivalent of UberX in the UK, one of the services offered by Uber, which
connects unlicensed drivers with consumers) was banned for unfair competition
in 2015 by the Milan Tribunal (in two decisions: on 25
May and confirmed on 2
July), decisions also upheld by the Turin
Tribunal in March 2017, while in May
2017 the Rome Tribunal lifted the ban on UberBlack (Chauffeur-driven
service), which it had previously imposed in April
2017. It is also worth noting that some cases relating to Uber have been brought
before the CJEU. In the case C-434/15 (Asociación
Profesional Elite Taxi v. Uber System Spain SL), despite the fact that the
case was brought before the Spanish Court to cease Uber unfair competition
acts, the Advocate General (“AG”) Szpunar’s Opinion
of 11 May 2017 dealt also with labour law issues. The AG held that Uber could
not be treated as a “mere intermediary between drivers and passengers. Drivers
who work on the Uber Platform do not pursue and independent activity that
exists independently of the platform.” (para. 56). In the case C-320/16 (Uber France SAS) the AG reaffirmed the
same position in his Opinion
of 4 July 2017 (paras. 16-17).
More interestingly in relation to the issues dealt with in
this post are the legal disputes that gig economy companies have to face following
challenges based on workers’ labour rights.
Hermes is facing, on
the one hand, an on-going
dispute over employment status of some of its self-employed drivers, which
should lead to a judgment
at the beginning of 2018, and, on the other, is under the scrutiny
of the UK Tax Authority (HRMC) on the employment status of the self-employed
couriers who work for the company.
In October 2016, the London
Employment Tribunal (“ET”) found that Uber drivers, when (i) the app is
switched on, (ii) they are in the territory in which they are authorised to
work, and (iii) they are willing/able to accept assignements, are working for
Uber under a “worker” contract (para 86). The judges expressed their scepticism
towards Uber’s claims to the contrary (para 87), stating that “[t]he notion
that Uber in London is a mosaic of 30,000 small businesses linked by a common
‘platform’ is to our mind faintly ridiculous” (para 90). Moreover the tribunal
held that the Uber driver’s right to be paid “does not depend on his achieving
set unit of production, […] the Uber driver performs ‘unmeasured work’. The
hours of the unmeasured work in any pay reference period are to be computed in
accordance with NMWR [The
National Minimum Wage Regulations 2015], reg. 45. In the ordinary case, the
relevant hours are the ‘hours worked’ […].” (paras. 126-127). Uber has appealed
this judgment and on 10 November 2017 the Employment
Appeal Tribunal (“EAT”) dismissed the appeal confirming the ET’s findings. Uber
declared that it will appeal the EAT decision.[15]
Also crucial was the February 2017 UK
Court of Appeal decision on ‘self-employed’ plumbers, who, having worked
for several years exclusively for Pimlico Plumbers, were entitled to workers’
rights. The case is now before the Supreme
Court. Legal disputes are taking place also in other
European Countries: early this month (October 2017) six Foodora riders took the
company to the Turin Tribunal (Employment Section) in Italy, arguing that they
were not self-employed and were instead entitled to proper workers’ rights.
These riders were fired following their protests against bad working
conditions, in particular low salary.[16]
In the USA, litigation is
helping the cause of gig economy workers. A 2015
Seattle City Council legislation (which allows drivers of app-based company
such as Uber, to form unions and to have collective representation over fair
working conditions) has been challenged twice in August this year: firstly by
the US Chambers of Commerce, of which Uber is member, because it would stifle
competition, and, more recently, by a group of 11 drivers, on the ground that
it is against federal labour law and the right to free association. In both
cases the US District Judge dismissed the challenges, but the parties declared
they would appeal.[17]
Moreover, a North Carolina Federal Court granted, in July this year,
preliminary class action status to a minimum wage and overtime lawsuit filed by
drivers working for Uber under the Fair Labour
Standards Act. The main aim of the class-action is to challenge Uber misclassification
of drivers as independent contractors. Around 18,000 drivers who opted out of
arbitration are eligible to join the class-action.[18]
5.
The EU approach
The gig economy workers’ quest for rights reaches
beyond national law. The EU Commission declared on 25 September that, in order to
modernize legislation on employment contracts, it has started consultation with
trade unions along with employers. The EU Commission is also moving forward
the so-called European
Pillar of Social Rights (“EPSR”), which consists of 20
key principles relating to equal opportunities and access to the labour
market, fair working conditions, and social protection and inclusion.
One of the concrete aims of
the EU Commission is to extend the scope of the directive on employment contracts
(Council
Directive 91/533/ECC, also known as the Written Statement Directive, which sets
an obligation on the employer to provide, within two months from commencement,
essential written information about the contract or employment relationship) to
on-demand, voucher-based and platform workers.[19]
Moreover the EU Commission would propose a new rule, which could “establish some basic rights such as the right to a degree
of predictability of work for workers with very flexible contracts or the right
to a maximum duration of a probation period.”[20]
It has been noted that, on the one hand, the
Commission proposal might raise costs for companies like Uber but, on the other,
the protection for workers might not be applicable to self-employed workers, creating
“a loophole for employers such as Uber and Deliveroo.”[21]
6.
Concluding remarks
The technology-driven
economy has brought numerous advantages to our everyday lives. It is however
crucial that these advantages for consumers are not to the detriment of workers
involved in the service offered. Similarly, flexibility at work is not tout-court a negative aspect, if independence
is a genuine choice rather than an imposition by the employer, and provided a certain
floor of rights is guaranteed. As we have seen, through litigation and action
by major political stakeholders, new solutions are on their way and will
hopefully bring fair and decent working conditions to people involved in the
gig economy.
[8] Transport For
London, "Notice 13/17: Licensing
decision on Uber London Limited" (22 September 2017).
[13] As far as the
fist point is concerned, the Deliveroo representative held that, practically
speaking, that is a clause that they would not enforce, However the Report
points out that “[…] to an average
worker with little or no understanding of employment law, the intended
deterrent effect is clear.” See House of Commons, Work and Pensions
Committee, "Self-employment
and the gig economy" (1 May 2017) para17 and fn 15.