March 18, 2021
It would be easy to point to the recent UK Supreme Court verdict as the reason. But let’s be honest with each other – something had to give here. This week, UBER announced it would be providing drivers in the United Kingdom with benefits, including vacation time and pension contributions. Now that specific debate is not quite over, but the initial concession by Uber was still significant.
But that is the gig economy. “App”-based businesses like Uber and Lyft should be concerned, but “traditional” multinationals need not be. Right? If only it was that easy.
Uber UK to Treat Drivers as “Workers”: In a fundamental shift for the ride-sharing giant, Uber UK announced it would treat drivers in the United Kingdom as “workers” – an employment classification unique to the UK which sits between an independent contractor and an employee. Along with the classification, Uber announced it would provide vacation pay and pension contributions. On minimum wage, the company stated it would only pay minimum wage while drivers have accepted trips. This stance mirrors the company’s “Proposition 22” framework in the US in California and is a clear break from the UK Supreme Court decision which stated drivers were entitled to the minimum wage upon signing into the app to drive regardless of whether a trip had been accepted.
In making the concessions, Uber CEO called on European Regulators and other gig-economy platforms to “strengthen independent work” instead of eliminating it.
COVID-19 and Worldwide Shift on “Independent” Workers: COVID is going to get the blame for things for years to come. With gig and platform workers, the COVID-19 pandemic amplified existing attention globally on gig workers and specifically on the lack of economic and social protections for this specific class of worker.
The fact of the matter, however, is the underlying issues in this debate have been percolating for years albeit in different forms. Debates over things like joint employer rules and independent contractor definitions are intricately intertwined with the gig economy debate despite maybe not actually having anything to do with the gig economy. As global governments try to address perceived weaknesses in worker security, many will be unable to untangle these issues and instead will attack them together.
Global employers take note.
Gig Workers? Yup. Independent Contractors? Yup. Yeah, so you are not UBER or Amazon. You do not have a scores of “on-demand” workers with the individual option to check-in and check-out of work at will. As a Senior HR Executive struggling to escape a myriad of Zoom meetings, it would be natural to dismiss this issue as not my problem. Understandable, but maybe not recommended.
Do you use independent contractors? How about staffing agencies? Or contractors for services like cleaning or maintenance?
The reaction to those question is likely “Yes, but that is different than gig workers.”
From a pure legal standpoint, that is a correct response. However, global regulators, in Latin America, Asia, Europe and in the United States, as examples, are looking at all these issues together as one giant picture.
The fundamental question regulators are asking is, are these workers getting adequate social and economic protections? And yes, how that question is asked can vary based on international jurisdiction, so the question can range from do these folks have collective bargaining rights to are they able to access the social security system.
If the answer to the above questions is no, regulators are assuming employers are using the framework to avoid paying for these benefits and thus the goal becomes to get the money. This is why all of the questions we asked above, like do you use staffing agencies, matter – many regulators see all of these situations as more-or-less the same as the gig economy issues.
In the US, states like California have dramatically changed tests for being an independent contractor to make the designation much more difficult. Employers in the state have had to make significant adjustments. Connecticut is considering providing gig workers with a version of collective bargaining rights which mirrors full-fledged unions. Additionally, past Democrat Administrations contemplated joint employer rules which would essentially make companies co-employers of franchisee employees.
Internationally, Mexico is looking to ban the practice of outsourcing jobs through staffing agencies.
The Future of Work = Future of Working Relationships. The above-mentioned government initiatives are not yet in place, however global HR executives need to be aware that attitudes are changing and that it is not just limited to Uber Drivers and Deliveroo couriers.