The Rise of the Gig Economy
News    ·   09-06-2017

AUTHOR: Ron Galea Cavallazzi, Marisa Vella, Edward Mizzi

Employment Tribunals in the UK are witnessing an upsurge in disputes related to what has become termed as the ‘gig’ or the ‘collaborative’ economy – described by the European Parliament - in its In depth Analysis of Employment and Social Affairs ‘The Situation of Workers in The Collaborative Economy’ - as “transactions between peers, with platforms taking the role of brokers between peers, with a view to making resource utilisation more efficient. However, at times also businesses make use of online platforms to organise “the outsourcing of tasks, which would normally be delegated to a single employee, to a large pool of ‘virtual workers’”.

UK employment Tribunals are struggling to give legal clarity on the employment status of people working in the collaborative economy. More importantly, these arrangements have caused authorities to scrutinise working practices adopted by other companies to ensure that workers are being treated fairly and to tackle cases of ‘false self-employment’. Even though the inception of this emerging economy is in its infancy in Malta, if you are considering a similar business model to that of Uber, Deliveroo, Amazon and the like, or if you’re simply having your current employees being put on a self-employed basis rendering services to the company; or engaging persons on a self-employed basis for various reasons – you should probably take a step back and re-think your business model. 

The Employment Status National Standard Order (S.L. 452.108) sets out a number of criteria to determine whether there is an employment relationship regardless of the terms of agreement between the employer and the would-be self-employed individual. In fact, if at least 5 out of 8 specified criteria are satisfied, then the self-employed individual will be deemed to be an employee of the person to whom his or her services are being provided. The criteria which are more easily satisfied in such setups would be that the worker earns at least 75% of his/her income from one person, the worker is subject to a working time schedule or minimum work periods and cannot subcontract his/her work.

If you find yourself in a position where the above are immediately satisfied, then it is recommended that you seek legal advice. There is the possibility of obtaining an exemption from the Department of Employment and Industrial Relations however this is only given in exceptional cases.

This law is often overlooked by employers until a claim is made and the employer is in a position where the self-employed individual will be entitled to all employee benefits, including compensation for overtime, sick leave and vacation leave entitlement. Having said this, there may be other options available to protect employers and operate within the law at the same time.

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