How Will COVID-19 Impact Workers in the Gig Economy?

How Will the Outbreak of COVID-19 Impact Workers in the Gig Economy?

We spoke to a few experts on how the coronavirus outbreak has impacted gig economy workers. Firstly, we explore the initial impact this situation may have. On the following pages, which you can explore below, we touch on how behind legislation is in this area, how Covid-19 has seen the rise of gig economy workers and how they are denied basic employment law rights.

How behind is legislation?

Angharad Aspinall, Employment Lawyer at Capital Law.

On 26 March 2020, the UK government finally announced support measures to bring the gig economy sector up to date with the wider employment sector, with regards to coping with the new coronavirus pandemic.

Up until then, gig economy workers who are forced to stay at home – because they have been diagnosed with COVID-19, are displaying the symptoms of the disease, or are not considered “key workers” – were advised by the government to “claim benefits”. Universal Credit is indeed available to anyone who is required to stay at home or is infected by the coronavirus and requires financial support. In addition, those affected by the coronavirus will on application be able to receive up to one month’s worth of Universal Credit upfront as an advance, and the normal seven waiting days for Employment Support Allowance (“ESA”) will not apply for new claimants if they are suffering from the disease or are required to stay at home.
Since this advice, and following widespread criticism from the self-employed sector, the UK government has now announced a package of assistance for self-employed workers. The “Coronavirus Self-employment Income Support Scheme” (“the Scheme”) is open to those self-employed individuals or partnerships who have suffered a loss of income. The Scheme represents a taxable grant which will be paid as a lump sum worth up to 80% of their average monthly income up to a cap of £2,500 per month for 3 months. This will be calculated by taking the average income over the last 3 years.

The Scheme itself only applies to those who have lost trading profits due to COVID-19; were trading in the last financial year and have submitted a tax return for 2018/19; are still trading now (or would be in the absence of COVID-19), and plan to continue doing so. In addition, a person must make more than 50% of their income from self-employment to be eligible, and the Scheme is only available to those with an average trading profit of less than £50,000.

Those who have not submitted a tax return for the tax year 2018/19, but would otherwise be eligible for the scheme, must make the submission by 23 April 2020 to remain eligible. Self-employed individuals who have only been trading this year and do not have a full year of accounts, will not be eligible for the Scheme.
Legislatively speaking, the law has not kept pace with the explosion of the gig economy in recent years driven by leaps forward in technology, which is one of the reasons it took the government far longer to announce its assistance to the self-employed market than to the employed sector. The core of the problem lies with the loose definition of what an individual working within the gig economy is. The gig economy normally engages individuals as self-employed contractors, with the freedom to accept or reject the “gig” (work), but this definition is fluid, and many so-called contractors are in fact arguing that they are “workers”, which carries higher levels of protection.

It will be difficult for these companies to remove the protections that they are now affording to gig economy individuals, and we can expect to see challenges if these companies try to remove these provisions once the coronavirus outbreak subsides.

A contractor is not entitled to the same statutory rights and protections as employees or workers, and the lack of a specific definition for these contractors leaves the distinction blurred. Often, their rights are determined on a case by case basis. Gig economy companies have spent considerable resources challenging claims that these people are employees or workers. The Independent Workers’ Union of Great Britain (IWGB) has threatened legal action against the Government on precisely this basis: “IWGB argues that in order to achieve these aims the government must take into account a number of factors relating to those who are not classed as ‘employees’ including: the need for all categories of worker, regardless of their employment status, to be able to follow public health advice to stay away from work if necessary without falling into financial hardship.”

The ride-hailing app Uber announced on 15 March 2020 that individuals contracted with them would receive sick pay, based on their average daily earnings over the past six months. Deliveroo has set up hardship funds for their riders. But many of these assistance packages offered by gig economy companies are contingent on the individual being diagnosed with COVID-19 or being told by a doctor to self-isolate. This is problematic, as the absence of coronavirus testing means that many people are being told to self-isolate without going to see a doctor, making the hardship fund unavailable.

It will be difficult for these companies to remove the protections that they are now affording to gig economy individuals, and we can expect to see challenges if these companies try to remove these provisions once the coronavirus outbreak subsides.
The government’s announcement marked a welcome harmonization of assistance between those employed and those self-employed and gig economy workers, although the much wider uncertainty and lack of legislative definition is still likely to hinder the gig economy as the UK continues to weather the coronavirus storm.

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