Is the gig up for the gig economy? (Part two)

The gig economy continues to be a hot topic for discussion as the UK works on its position on fair work. Dan Cave uncovers the current climate and explores the alternatives.

Catch up on part one of this story here before reading the below.

While the government might not have gig economy changes in its sights, unions do.

On a backdrop of increased strike action – 2.5 million working days were lost to strikes in 2022 – unions are feeling increasingly positive about their role with gig economy employers, with University of Bristol figures showing that 64% of gig workers would be interested in joining a union.

Traditionally, unionisation in the gig economy has been difficult. Unions sometimes misunderstood what individuals liked about flexible gig work, while traditional union recruitment tactics struggle when workers show up for work via an app.

“But we’re improving our processes and getting better at operating in the digital space,” says Andy Prendergrast, national secretary at GMB.

More on the gig economy:

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Half of UK gig economy workers paid below minimum wage

Just Eat employees forced to take up gig economy model

Now, not only are unions bringing employment claims with gigging individuals – the landmark Uber case was driven by the members of the App Drivers & Couriers Union while GMB is supporting the Bolt drivers group claim – they have won historic deals with gig economy giants, such as GMB’s agreements with Hermes and Deliveroo.

With the Deliveroo deal allowing collective bargaining on pay, rights, and wellbeing, Camilla Kater, advisor to the CEO and senior VP delivery and care at Deliveroo talks about the deal in positive terms.

“Supporting our riders is central to our business and by signing a landmark agreement with the GMB union we established collective bargaining on pay and consultation rights on benefi­ts and other issues, including riders’ health, safety and wellbeing,” she says.

With the deal allowing Deliveroo to evidence it is at the very least entering into conversations about working conditions, Prendergrast adds that bigger gig economy employers are aware that with an election set for 2024, a future government might have more appetite to change the gig landscape and are keen to utilise union links to political parties.

Indeed, Labour, which has a double-digit poll lead over the incumbent government, has published a green paper setting out the intent to ensure that there is a single worker status and workers get rights from day one at work if it is elected.

“[The big platforms] are reading the room as there are arguments about industrial action laws and grey areas [of employment],” Prendergrast says.

Elsewhere, Wood sees a nascent move towards other forms of gig economy worker collectivism in the form of councils giving workers the ability to review management decisions, something he has seen in Germany.

“The councils [which workers are part of] get information on the workforce and they can review the information and put individuals in contact with their representatives,” he adds.


Gig economy financials

With so many factors – consumer, commercial, employee, union, government, and legal frameworks – at play, it’s clear the gig economy can be confusing.

Whilst gig economy arrangements deliver clear cost benefits to businesses, there is wide evidence that has come to the detriment of working conditions and pay.

As inflation rises and the business landscape continues to be uncertain, Badger notes that this of course has business appeal.

“In a cost of living crisis, where a business can only raise prices so much the only way to increase your margin is to increase volume [of sales] or decrease labour costs per unit,” explains Badger.

With Morrison suggesting the court system’s appetite to hear appeals from gig economy employers might be on the wane, there is potential that not all gig economy practices will be so commercially unencumbered going forward.

Already some corporate investors are saying they won’t buy stocks from companies with a history of poor worker rights, while Wall Street analysts predict Uber’s employment status payouts could hit over £390 million.

Separately, Deliveroo’s poor initial stock market performance has been linked to concerns over how it classifies its workforce.

And there appears to be a step change in what gig employers are offering their workforce. “Deliveroo was among the first platforms to offer riders free insurance, which we have extended to cover periods of illness and financial support for new parents,” says Kater.

Separately, John Gillan, general manager at courier business Stuart UK, says how proud he was that Fairwork picked up on its offer of insurance to workers and good safety performance.

“We are proud of the progress we have made in our Fairwork score over the last few years. It reflects our commitment to courier partners, and we will endeavour to remain on this upward trajectory,” he says.

Of late, gig economy employers also face competition from those branding themselves as offering full employment benefits. For Wood, there is evidence this model could take some market share in local areas.

“Some platforms are embracing new gig economy regulations and creating a local niche where they’re not competing on price but on quality,” he says.

Here, Packfleet, which operates in the courier sector, offers its workforce the Real Living Wage, regular hours, parental leave, and private health insurance.

Tristan Thomas, CEO of the London-based firm says this benefits HR metrics.

“This model means we know we’ve got experienced, friendly drivers on the road engaging regularly with customers, something you can only get from contracted drivers,” he says, noting that retention of staff benefi­ts the business.


HR goes it alone

All of this isn’t to say that workers want rid of the gig economy. As Deliveroo’s Kater says: “Our riders care most about flexibility, attractive earnings and security.” The first being something that gig work inherently offers.

For Woods, it’s just that tensions between individuals and gig employers arise when workers feel like they are not heard and the power between gig economy employers and individuals is imbalanced.

“I think a big issue is that there is a contradiction whereby workers are dependent on a platform that ignores the fact that the dependency and power relationship exists,” he says.

"The gig economy question is not going away"

However, with no apparent changes to employment frameworks forthcoming, it means businesses might have to make their own decisions on the gig economy if they want to proactively address any imbalance or deal with issues with working conditions, status challenges and confusion, and the financial viability of the arrangement for both organisation and individual.

To make headway here, CIPD’s Willmott says organisations should regularly review the employment status of people on atypical employment contracts including whether they are choosing to work in a gig economy arrangement.

“Enabling people to choose whether they would rather work as an employee and benefit from the employment rights that go with this, or whether they are happy to compromise on security for the flexibility of working in the gig economy, can help reduce conflict over issues of employment status and rights," he says. 

Similarly, Kermode adds that individuals need all the information about what different employment statuses mean and trained HR practitioners or experts should share this information.

“Empowering people to make their own decisions is a good way forward but some companies don’t understand themselves or are deliberately trying to exploit individuals,” she adds.

There are, of course, gig economy alternatives. Businesses could choose to utilise traditional employment structures, as Packfleet does, or, if they’re already a platform gig employer, evolve into becoming a connecting service for individuals and customers.

Or they could wait until a potential framework change, as touted by Labour, occurs or some alternate employment model is built, such as a move towards a Danish or Dutch system where employers enjoy workforce flexibility but individuals get training and security.

Though the latter does not currently seem likely.

What is more certain, though, is that gig-style flexibility, for businesses and individuals, is now ingrained in the UK employment market. “Companies like Deliveroo will live or die by if they make a profit or not but the logic of the platforms will linger,” says Badger, adding that this means HR has a big question to ask itself regarding if that logic is right for their people.

“The biggest asset organisations have is their human resource, so if an executive tells you ‘we have to make our workforce more precarious’ you have to ask ‘What is that going to do?’ It will make them more stressed and more anxious and hit their productivity,” he adds.

For Prendergrast, the casualisation of work driven by gig economy structures means there are other questions for businesses to ask themselves about what gig work means for the UK economy and society as a whole.

“Insecure work is a genuine concern as previously well-paid jobs are casualised and people feel like they’re locked out of the benefits of society,” he adds.

It’s no small issue to think about but one that, with mounting tribunal cases and no apparent government will to drive change, HR will likely have to play a role in finding an answer for. As Morrison says: “The gig economy question is not going away anytime soon.”

This is part two of an article that appears in the July/August 2023 print issue. Subscribe today to have all our latest articles delivered right to your desk.