Uber ruling must not prevent companies from engaging the self-employed

31/10/2016 |

Uber today lost a landmark employment case in the UK, preventing the company to classify their drivers as self-employed.

While independent work is prevalent in the construction, household, and transportation services, it is also widespread within certain types of specialized knowledge-intensive occupations. The largest majority of freelancers, the highly-skilled end of the self-employed and the fastest growing segment of the EU labour market, consider themselves and operate as self-contained small businesses rather than workers, so the misclassification discourse is not too relevant for them.

However, today’s ruling indicates that policymakers need to steer away from a “one size fits all” approach. They need to recognize the heterogeneity in the self-employed labour market, and attempt to divide it into (1) advantaged, (2) disadvantaged and (3) false fragments. They need to device targeted measures that:

  1. Legitimize, professionalize and support the advantaged fragments;
  2. Protect the vulnerable fragments;
  3. Clearly set out the difference between false and legitimate self-employment so the former can be avoided.

As stated by the European Forum of Independent Professionals (EFIP) President Chris Bryce:

EU Member States must be careful not to dissuade companies from making use of the highly-skilled, on-demand flexible workforce as a whole. The vast majority of people who work this way made an active choice to do so and cherish their self-employed status.

The latest results from the “Global Entrepreneurship Monitor” confirms this view. They indicate that the level of “opportunity” entrepreneurship — where people start up for positive reasons (e.g. to make the most of a good idea) is close to five times higher than the level of “necessity” entrepreneurship — where people start up for negative reasons (e.g. because they had no other options for work).

We need to move past a narrow debate on employee-versus-self-employed, or discussions like: “Is Uber good or evil?” or “Is the sharing economy exploitative?”. The right question we should be asking ourselves:

What enabling environment is needed for people to find multiple and better alternatives than a traditional employment? Will a more portable system of benefits that is tied to workers themselves, not to a single employer, be helpful in this regard?

The current legal differentiation between employees and self-employed in many EU Member States has the unintended side-effect of preventing platforms from providing more support to workers (e.g. offering them training or additional insurance) because the support given could transform the relationship into an employment one, thereby attaching a host of legal regulations to conform with.

This is why businesses and local authorities should co-create innovation zones as safe harbours to experiment with flexible work arrangements. They should support the development of local platforms letting companies use freelancers without fear of liabilities if they might later be reclassified as employees and use big data to monitor trends. The current EU Cluster Policies may provide a suitable framework to develop this.

As the world of work evolves, it’s essential that EU employment, business and tax legislation isn’t left behind.

Marco Torregrossa is Secretary General at the European Forum of Independent Professionals and Managing Director at Euro Freelancers.

This post originally appeared on Medium here.

Image credit: Aaron Parecki Flick CC licence P1020406.JPG