In the final article in a three-part gig economy series, PwC employment law partner, Nick Willis, looks at whether the position on contingent worker rights in the gig economy is the same in other countries as it is in the UK.
In the last two articles on the gig economy, we looked at the current position on workers’ rights and what the future may hold given possible new legislation and cases being taken through the employment tribunal system.
But what if you are developing a business model based on a technology platform and want to roll this out globally? Or, you simply want to hire a few contractors in another country?
The issue of whether those contractors have employment rights will be of great importance. In this article, we look at whether the position on contingent worker rights is the same as the UK or is very different in other countries.
To answer this question, PwC undertook a survey in over 30 countries across its employment law network. We considered the hypothetical situation of a courier who has been categorised as self-employed.
The courier works for her company for nearly all her working time although the written contract between them says she is free to work for other organisations. She is allocated jobs and has enough work to keep her busy.
She does not have to accept jobs but if she does, the price is fixed by the company and there are fixed routes for the delivery. She provides her own transport. She must wear a uniform and have insurance. The company provides these and makes a deduction from her pay for them.
In well over half the countries in the survey, there was a risk that the courier would be found to have employment rights, despite the label of self-employment. These countries include many in the EU such as Germany, Italy and The Netherlands.
Outside the EU, there is an equivalent risk in countries including Switzerland, South Africa and Australia. Here are some of the themes coming out of the survey.
(1) Many countries have the concept of “hidden employment” whereby authorities will decide employment status by looking at what is happening in practice rather than just the documents signed by the parties.
(2) The test on employment rights usually involves looking at a whole range of factors. One factor that has great importance in most countries is control – the subordination of the individual to the company. The higher the degree of control, the greater the chance that the individual will benefit from employment rights.
(3) The tax treatment of remuneration paid to the individual often follows the issue of employment status, so tax challenge from revenue authorities can go hand in hand with the risk of legal rights.
(4) If these points suggest that you will get a consistent international answer to a fact pattern such as that described above, that is misleading. Applying a set of criteria that on their face look similar can lead to different results on status with different legal and tax risks.
This is the case even for countries within the EU where you might expect the system of minimum rights emanating from directives to lead to a more consistent approach.
We also found that in many countries, there is recent and ongoing litigation testing the boundaries of self-employment. The pace of change in worker rights in the gig economy does not generally seem as fast as in the UK.
This may well reflect the fact that the UK has seen a higher growth in the numbers of the self-employed than is the trend elsewhere. But change is happening everywhere: in The Netherlands for example the authorities are starting to enforce a new “model contract” regime for contractors as from May 2017.
The overall message is that tax and legal systems are struggling to keep up with new ways of working and workforce structuring. Whether we will see a more consistent international response to this challenge remains to be seen but it is certain that things will look different in a few years’ time.
Nick Willis is a partner in the employment team at PwC
Missed the rest in this mini-series? Catch up here:
- Getting giggy with it – The status of gig economy workers
- Gig economy worker rights – Looking to the future
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