Walking the Legal Tightrope: Self-Employed Labour in Technology

Helped on by the pandemic and a new desire for flexible forms of working, the numbers of self-employed have been growing consistently.

The Office for National Statistics recently released figures showing that the self-employed population has seen four quarters of consistent growth and now stands at 4.3 million people across the UK.

Outside of the UK, there is a similar desire for self-employed labour.

Tech giants, such as Meta (the owner of Facebook and Instagram) and ChatGPT, are reliant on cheap self-employed labour outsourced to the Global South for roles in coding and content moderation on their platforms.

Running a business model that utilises self-employed labour is not without risks for employers.

In 2021, after a long legal battle, the UK's Supreme Court finally ruled that Uber's thousands of drivers were workers rather than self-employed and were entitled to rights such as the minimum wage and holiday pay.

This was partly due to the level of control that Uber exercised over the drivers in practice, including setting the fares and contractual terms and penalising drivers who rejected too many rides.

Individuals working for companies such as Deliveroo and Pimlico Plumbers brought a raft of similar claims, who all alleged that their apparent self-employment was a sham.

There has been a clear trend over recent years in the UK and worldwide, where self-employed individuals have demanded greater rights and clarity around their employment status.

Such claims could be brought by workers in any sector, but most have been brought by companies reliant on some form of tech platform.

The software offers a means to simplify complicated tasks and quickly distribute offers of work to remote workers whilst simultaneously giving the business a way to track performance and delivery.

This has made the practice of engaging self-employed labour a natural fit for many business models in the sector.

Therefore, the large number of self-employed in the sector has attracted greater employment status claims.

Whilst the courts have led the way in applying employment status laws and spotlighting sham self-employment over recent years, the issue is also attracting political attention.

The price of "mislabelling" an individual as self-employed in their contract but actually treating them as a worker or employee in practice can be steep.

Not only could the individual be owed backdated holiday pay and accrue increased rights and protections, but there could also be liability for unpaid tax and National Insurance contributions or for not paying the national minimum wage under separate financial laws.

Employers are encouraged to review their relationships with self-employed workers and seek advice where there is any uncertainty around their status.