09 February 2018

A quarter of people working in the gig economy earn less than the National Minimum Wage, a new government-commissioned report has shown.

In its paper The characteristics of those in the gig economy, NatCen Social Research found that 4.4% of the population - 2.8 million people - had participated in 'gig' work in the last 12 months.

Around two in five (42%) of these worked for courier services, while 28% took transport roles and 21% delivered food.

People aged between 18 and 34 accounted for just over half (56%) of gig workers, shaking the perception that such positions are mostly taken by students and other young people looking for supplementary income.

Test cases challenging the employment status of individuals classified by their employer as 'self employed' (and therefore without workers' rights), but who believe themselves to be 'workers' (with access to basic rights) have overwhelmingly fallen in favour of the claimant in recent years.

Employers including Uber have been ordered by the courts to pay their workers the minimum wage and holiday pay, and provide other workers' rights such as rest breaks.

It is expected that the majority of those working in the 'gig' economy are also being illegally underpaid and being prevented from accessing the rights they are entitled to except by taking their employer to a tribunal.

The NatCen Social Research report was commissioned by the Departent for Business, Energy and Industrial Strategy to feed into the government's Good Work Plan, which was announced earlier this week and responds to the Taylor Review.

Despite the report clearly demonstrating that a significant proportion of workers receive less than minimum wage, the Good Work Plan does not introduce further sanctions to prevent bogus self employment or to better enforce the law. Instead, a consultation has been launched into 'clarifying' and raising awareness of employment status for both business and workers, suggesting that the onus will continue to fall on workers to understand, and then police, their own rights.

The Institute of Employment Rights recommends that the three-tier employment status system - which prescribes different workers' rights to the 'self employed', 'workers' and 'employees' - is scrapped in favour of one universal status of 'worker' for all those in employment bar the genuinely self employed. All workers would receive the full suite of rights from day one, preventing employers from misleading workers as to the rights they are entitled, and bringing an end to the practice of undercutting 'employees' with 'workers' and 'workers' with the bogus self employed in a race to the bottom on employment rights.

Read more about our recommendations in our Manifesto for Labour Law