More UK workers than ever before are employed informally, but companies engaging so-called ‘gig’ workers may be taking on more responsibility than they and their insurers think.
In February, the UK government unveiled its ‘Good Work Plan’, making the UK one of the first countries to address the challenges of the so-called ‘gig economy’.
Building on findings from 2017’s Taylor Review, which highlighted the growing use of informal employment in the UK, the Good Work Plan will, for the first time, grant low-paid “vulnerable workers” holiday and sick pay.
It also provides all workers, including casual and those on zero-hour contracts, with a list of day-one rights including holiday and sick pay, a payslip and the right to request a more stable contract.
Employers are likely to be required to provide increasing clarity over employment status going forward, and may face higher penalties for failing to provide informal workers with the benefits they are owed.
While the Good Work Plan brings some clarification of worker rights, plenty of questions remain for employers over the scope and nature of their duty of care to an increasingly fragmented workforce.
The Work and Pensions Committee recently reported that self-employment in the UK increased from 3.8 million in 2008 to 4.8 million in 2017, accounting for 15.1 per cent of the workforce.
It also noted a significant rise in flexible working, particularly ‘gig work’, which it said was characterised by a reliance on intermediary digital platforms or apps to connect the self-employed with work.
According to the Chartered Institute of Personnel and Development (CIPD), more than 1.3 million workers (4 per cent of the workforce) fall into the gig economy.
Many of these workers operate from home or remotely. Many are engaged by multiple employers, while some are simultaneously both employed and self-employed.
Tellingly, the CIPD found that only 25 per cent of gig economy workers consider gigs their main job, with the majority using gig work to supplement other income.
The increasingly fluid nature of informal working engagements has created significant uncertainty for employers and their insurers.
“As the economy shifts towards more esoteric work, employers will increasingly hire people who may only partially work for them, making it more difficult than in the past to identify when and where work-related stress, injuries or incidents originate, and who is responsible,” notes Stuart Winter, CEO of UK Retail at JLT Specialty.
Legally, gig economy workers currently fall somewhere between ‘worker’ classification (a rung down from full ‘employee’ status but still affording rights to the national living wage, basic sick pay, paid holiday and protections against discrimination) and ‘self-employed’. However, this may be set to change.
Two UK parliamentary groups want everyone in the gig economy to be classified as ‘workers’ by default and, already, numerous court judgments have found in favour of flexible workers claiming worker status.
In November, for example, Uber lost its high-profile appeal against drivers that courts considered workers.
“Under the law as it stands, courts are increasingly willing to find worker status as protecting the rights of the worker. This has significant implications for companies like Uber or Deliveroo, which style themselves as ‘tech’ companies with relatively limited obligations to those engaged on their behalf,” says Perry Hill, Partner at law firm DWF.
In the construction sector, gig-type contract work has been commonplace for decades, with construction firms and their insurers generally assuming that the same duty of care is owed to labour-only subcontractors as to direct employees.
However, Winter believes employers and their insurers in other sectors may still be unsure of the nature of their responsibilities.
“Employers are entering uncharted waters, and should find out how their insurance cover responds with self-employed, partially employed and gig economy workers sooner rather than later,” he says. “You don’t want to find out through litigation.”
It is likely, for example, that employers owe remote or home-based gig workers a duty of care in their remote working environments.
Most employers are obligated to conduct risk assessments of home work spaces for direct employees.
If a worker suffers stress, RSI or bodily injuries as a result of their remote working conditions, the employer may be found liable, just in the same way as they would be to blame if a worker was injured because a company car was unsafe.
“Even for gig workers, courts are likely to find that the engaging organisation owes its subcontractor significant duties, regardless of how the relationship is defined contractually,” says Perry, who adds that remote workers with multiple employers could bring claims against all of their employers simultaneously if they were to suffer some form of injury in the line of work.
“This raises interesting questions around the burden of proof. The claimant goes a long way to proving their claim by demonstrating that they suffered the injury they contend, which then puts the ball in the defendant’s courts to prove that they discharged their duty of care,” he says.
Risk managers are well versed in controlling risk in their own workplaces, factory floors and construction sites through training and on-site rules, procedures and regulations.
This can and should be applied where possible to remote work spaces – even on informal engagements.
However, Winter points out that, if there is ambiguity over whether a company has duty of care over an individual, the very act of attempting to control risk in their remote working environment may be seen as an admission of responsibility.
If a company goes down this route, it should be prepared to commit fully to its risk efforts thereafter.
Fit for purpose?
Against this backdrop of changing work engagements and legal uncertainty, it is essential employers check the terms of their insurance policies to make sure they are adequately covered.
ccording to Hill, insurers are operating within a regulatory and legal framework that hasn’t necessarily caught up with the changes in the gig economy, and traditional employers’ liability cover “is starting to look unfit for purpose”.
One of the key challenges is that limits for this type of cover are typically calculated based on companies’ declared wage roll – in other words, directly employed labour.
But as Winter points out: “In sectors such as tech, retail or publishing, the directly employed wage roll no longer accurately reflects the risks these businesses are undertaking. Are all insurers aware?”
Some insurers have responded by designing more flexible policies that are written on a ‘claims made’ basis, Hill notes, while others offer cover including co-working and flexible-working spaces.
“Flexible insurers are beginning to incorporate changes in the working environment into the cover they write and, going forward, insurers have to ask brokers and insureds the right questions to ensure clients get the right coverage.”
Winter suggests that, in the future, gig workers may be able to access work and insurance through umbrella companies that handle issues such as tax and insurance on their behalf.
However, until then, the onus is on employers engaging gig workers in the UK to know the extent of their obligations and adjust their risk practices and insurance coverage accordingly.
Are you vicariously liable?
“Vicarious liability is a real issue for the gig economy. Courts now look at whether relationships are akin to employment relationships and, if so, will find an organisation vicariously liable for the actions of the individual under employment.
“In recent years we have seen a number of court decisions that extended the scope of vicarious liability to include categories of individuals who would not have previously been considered to be in a relationship akin to employment. Regardless of how a company portrays its engagement with informal workers, it may still need to consider putting insurance cover in place to pay out if a court were to find it vicariously liable.”
For more information, please contact Stuart Winter, CEO of UK Retail on +44 (0)115 935 5351 or email firstname.lastname@example.org