Illegal working in the gig economy

Currently, the duty to undertake right to work checks applies to employers who employ staff under a contract of employment, service or apprenticeship. It does not apply to workers who are not a direct employee, for example where they are self-employed. 

This distinction has meant that most gig economy companies, such as couriers, taxi service providers, and food and goods delivery services, have not been subject to the civil penalty regime, and have been left to regulate themselves. Unsurprisingly, this has led to gig economy companies becoming a haven for illegal work. During random checks two years ago, the Home Office found that two in five delivery riders who were stopped were working illegally. Much of the opportunity to undertake illegal work is created by the availability of substitution clauses. These clauses are used by gig economy companies to allow drivers and riders flexibility to appoint a substitute if they wish. They are however openly used to allow people with no permission to work in the UK to work illegally.   

The App Drivers and Couriers Union recognises the issues arising from a lack of regulation in the sector, saying “Unfortunately there is this loophole that allows some bad people to come through. They are not vetted so they could do anything”.

In an important proposal within the Employment Rights Bill, the Government proposes to regulate the use of substitutes in the gig economy by requiring company directors of relevant companies to keep a register of all dependant contractors, including those carrying out work for the company under a substitution clause. This will apply to companies that provide services in relation to postal and courier activities, food and beverage service activities or taxi operation, have more than 250 employees in the UK and overseas, and include provision within the company’s contracts with contractors which allow the contractor to send another qualified person (a “substitute”) to complete the work in the contractor’s place.

In tandem, the Government has proposed amendments to the Borders and Immigration Bill to expand the duty to undertake right to work checks to workers or individual sub-contractors, such as those working in the gig economy. It is understood that this requirement will cover those working as subcontractors, but as currently drafted will not extend to substitutes. The Government’s intention however is to tighten up regulations to bring substitutes within right to work regulations, although this is recognised as being challenging due to the complexity defining status under employment law, and far-reaching consequences of these changes. 

Those working as substitutes can easily go undetected. The proposal to require companies to maintain a register of substitutes would provide much needed transparency and would support a further expansion of the duty to prevent illegal working and would mean these gig economy companies could be held to account for facilitating illegal work.