What is the gig economy?
‘Gig economy’ (or ‘digital economy’, ‘crowd economy’, or ‘platform economy’) is not a defined legal term or concept. The term is generally used to refer to the sector of business and employment that’s characterised by the performance of work on an on-demand, usually one-off basis (ie via ‘gigs’). This involves short-term working relationships. Gig economy work is generally unpredictable and contingent (ie if no gigs are available and suitable for an individual, it’s likely that no work or pay is available).
Gig economy work usually involves a gig economy worker freely contracting to perform a specified work assignment for a customer via a digital platform that matches the gig economy worker with the customer on a talk-by-task basis.
Payment for work will generally be on a task-by-task basis, and the provider of the digital platform will generally take a fee in exchange for their services matching a gig economy worker with a customer.
A gig economy worker will often have more than one job or may also run their own business.
Note that the term ‘gig economy worker’ is used throughout this guide to refer to somebody who works within the gig economy; not to refer to such individuals who definitely hold ‘worker’ status.
What sorts of goods and services are provided via the gig economy?
Gig economy work covers a wide range of industries, services, and products. Some examples of products and services include:
ride-sharing (ie passenger transport services, facilitated by businesses such as Uber)
deliveries (eg of takeaway food or groceries, facilitated by businesses like Deliveroo)
digital services (ranging from data analysis to content creation, facilitated by businesses like Fiverr)
performing household and practical tasks (eg cleaning or household repairs, facilitated by businesses like TaskRabbit)
provision of accommodation (eg for holidays, facilitated by businesses like Airbnb)
provision of goods or craft services (eg of handmade goods and customised items, facilitated by businesses like Etsy)
What is a gig worker’s employment status?
A key legal issue at the heart of the gig economy is the murkiness surrounding the employment statuses of those working within it.
What is an employment status?
An employment status is the legal status that an individual holds in relation to somebody they perform work for. This status determines which rights the individual holds under employment law in relation to their relationship with the person or business they’re performing work for (eg their rights to paid holiday, statutory sick pay, and (paid) family leave). Generally, with increased rights comes decreased flexibility (eg less flexibility to work at will or for multiple employers), and vice versa.
The established employment statuses in the UK are:
‘employee’ - this involves the most obligations, rights, and certainty
‘worker’ (or ‘limb (b) worker’) - this confers a significant amount of rights, obligations, and certainty, but less than that conferred on an employee
‘self-employed’ (or ‘consultant’) - this is somebody who genuinely works for themselves (eg runs their own business) and who contracts autonomously to perform work (ie with the business or person who they’re providing work for)
For more information, read Consultants, workers, and employees.
An individual’s employment status is determined by the reality of their working relationship (ie not just by what any contract for work, such as a Zero hours contract, states their employment status is). The reality of a working relationship depends on various factors, including:
whether an individual is engaged to perform work personally (eg whether or not it’s acceptable for someone else (who they pay) to perform the work on their behalf, ie as a substitute)
whether there is a contract under which work is performed and, if there is, its nature and contents
whether the individual’s working relationship is with an independent client/customer (suggesting self-employment) or with someone who controls what work is performed (here it’s more likely that the person performing the work is an employee or a worker)
the degree of control exerted by the party engaging the individual over that individual in the context of their work
mutuality of obligation - ie whether there is an obligation on one party to provide work, and on the other to perform this (if this exists, the individual is likely an employee)
which party provides any equipment required to perform the work
how the individual is paid (eg by a wage or salary vs by fees calculated by reference to their output)
exclusivity (eg to what degree the individual can work for other parties)
What employment status does a gig economy worker have?
Gig economy workers don’t automatically have any particular employment status. As for any other person performing work, their employment status will depend on the nature of their working relationship. Most frequently, a gig economy worker will be considered a worker or self-employed.
A gig worker’s employment status differs from situation to situation. For example, different legal cases have arrived at different conclusions on gig economy workers’ employment statuses based on the various factors influencing employment status.
For example, if a business that runs a digital platform matching gig economy workers with customers exerts a significant amount of control over these gig economy workers (eg by setting their prices, dictating terms of contracts of work, setting requirements for the services provided, and/or restricting how gigs can be refused), it’s likely that the person working under this level of control will be considered to have worker status. The UK Supreme Court’s 2021 judgment in the legal case Uber v Aslam provides an example of the importance of control. Here, Uber drivers were held to be workers largely due to the significant amount of control Uber exerts over them by, for example, setting fares, setting out terms of work, limiting drivers’ ability to reject fares, and limiting their communications with passengers.
The degree to which a gig economy worker can substitute another person to perform their agreed duties is another strong indicator of employment status for gig economy workers, particularly those in delivery and ride-sharing contexts. For example, in November 2023, the UK Supreme Court delivered a judgment (Independent Workers Union of Great Britain v Central Arbitration Committee (CAC)) finding that Deliveroo riders (who generally deliver food from restaurants to customers by bicycle or motorcycle) are not considered workers (ie they’re considered self-employed), largely due to these riders’ unlimited right to substitute (ie to have somebody else deliver food for them) even after they’ve accepted a gig.
At the end of the day, determining a gig economy worker’s employment status relies on an understanding of various complex legal factors. If you’re a gig economy worker or you employ any, you can Ask a lawyer for help determining employment status.
What rights do gig economy workers have?
The employment rights that a gig economy worker has depend on their employment status. If they’re considered to be a worker, they’re entitled to the protection of the various employment rights that workers hold. For example, they’re entitled to:
receive a written statement of particulars setting out the terms of their work
be paid at least the national minimum wage (NMW)
take paid holiday
be protected against discrimination
If they do not have worker status and are held to be self-employed, they hold significantly fewer employment rights. They’re generally still protected against discrimination and are covered by health and safety laws when on somebody’s premises (eg someone they’re performing work for), but they’re not entitled to the majority of other rights workers receive (eg paid holiday or payment of the national minimum wage by clients).
What should I do if I employ a gig economy worker?
If you employ any gig economy workers, it’s vital to be aware of the employment laws and rights applicable to these individuals. One of the first things to do is to determine the gig economy worker’s employment status so you know which rights you need to uphold.
If your gig economy worker is a worker
If a gig economy worker is a worker, make sure you uphold their employment rights. For example, you’ll have to work out the hours they work, however irregular, in order to ensure they’re being paid at least the minimum wage applicable to them. The government offers guidance on determining hours worked for this purpose.
For a worker, you should create a contract for work that accurately reflects the nature of your work relationship. For example, a Zero hours contract.
For more information, read Hiring.
If your gig economy worker is self-employed
If a gig economy worker is genuinely self-employed, you should ensure you have a clear and detailed Consultancy agreement or similar in place to set out the terms of the working relationship.
For more information, read Using consultants.
If you need help managing your obligations as a gig economy employer, do not hesitate to Ask a lawyer.