Bolt ruling: is this the end of the gig economy’s ‘golden age’?

From web designers to Deliveroo riders, the gig economy is one of the fastest-growing sectors in the UK. It brings plenty of benefits for businesses, giving them access to a flexible, low-cost workforce. Yet the shine may be wearing off for workers.

Last Friday, 15,000 drivers for the ride-sharing app, Bolt won a legal claim to be classed as workers in the UK. The ruling means they will qualify for basic employment protections such as being paid the minimum wage and accruing holiday pay.

That sounds like a reasonable adjustment to most of us. But, the win was hard-fought for by the law firm, Leigh Day. It follows a similar judgement in 2021, when the UK supreme court held that Uber drivers were entitled to certain employment rights.

Gig economy controversies have become rife in recent years, as shady employers take advantage of leaner laws for part-time staff. We explore the rise of the gig economy, and ask how — and if — lawmakers can control a sector that seems to have outpaced regulation.

The future of work

The foil to traditional 9-5 employment, gig economy jobs surged in popularity post-COVID, as more Brits sought out flexible, short-term contracts.

The trend has since come to define the new ‘future of work’ post-pandemic. Research by StandOut CV estimates that one in six UK adults now work a gig job at least once a week. Combined, this group contributes around £20bn to the UK economy.

In September, the Recruitment and Employment Confederation (REC) surveyed 520 temp workers in Britain. 79% said their work provides added flexibility, while 68% said it improves work-life balance (the ability to juggle personal and professional commitments).

“Workers shared a wide variety of reasons for why temporary work is the best option,” said Rufus Hood, Country Manager UK at Coople. “Fitting in work alongside studies; balancing work and childcare; and picking their own hours in semi-retirement were just a few.”

According to the official public record, there are four types of self-employed workers. These include those who freelance full-time, as well as employees who work in the gig economy to supplement their main source of income (also known as a side hustle).

However, there are also many among the self-employed who “reluctantly earn money within the gig economy”, as well as those who feel they have no alternative but to take on freelance work.

For the latter two groups, the benefits of a gig role are cancelled out by the absence of protections afforded to those who can qualify for sought-after ‘employee’ status.

Self-employed or soul-destroyed?

Platforms such as Bolt, Uber, and Deliveroo employ tens of thousands of independent contractors. While managing a workforce this size would cost millions, hiring self-employed workers lets the apps operate on a leaner business model, minimising costs and liabilities.

Recruitment for gig work is not just for big companies, though. A recent study by 1st Formations found that 53% of small businesses are looking to hire on a contractor or freelancer basis, compared to 21% that plan to hire permanent roles.

Unfortunately, the popularity of the gig economy model has become its own worst enemy. As consumers demand faster service delivery across sectors, global competition has driven down wages, resulting in lower income and job instability for workers, who miss out the benefits of paid leave and protected working hours.

Because platform-based gig work has expanded rapidly, governments have been slow to implement regulatory measures, inviting bad actors across all sectors.

Last week, the Guardian reported that a shift-work platform, Temper Works, had advised hospitality firms to circumvent new tipping laws by employing its freelance workforce.

The company apparently claimed that these workers were exempt from the legislation, allowing businesses to avoid the added costs and complexities of tip allocation — and confirming concerns from experts that some customer tips still wouldn’t go to service staff.

Has the horse bolted on regulation?

Critics had hoped that the gig economy gaps would be addressed in the Employment Rights Bill. Alongside a raft of worker reforms, the Bill promised to introduce a ‘single worker status’ for self-employed staff, as well as ban “exploitative” zero-hours contracts.

However, these measures went missing from the published Bill (although the latter is expected to be implemented using secondary legislation).

Whitehall may have been spooked by the cost impact that the change could have on employers. Lawyers for the Bolt claimants believe the compensation owed to their clients could be worth more than £200m.

Still, despite a slow response from the government so far, the Bolt ruling signals a changing of the tide for the UK gig economy. It’s one that could spur MPs to act sooner and pave the way to thousands of people gaining employment benefits and rights.

Or so James Farrar, head of pressure group Worker Info Exchange, hopes. Over the weekend, Farrar said the government should move to address the issue of worker status.

“[Bolt’s case] confirms that many workers are “trapped in an employment relationship where they are systematically denied basic rights”, he said. “Absence of regulatory oversight has not only caused serious problems for workers but is leading to serious market dysfunction.

“It is a shame that the government baulked on addressing worker status in the current employment bill and should now do so in light of this ruling.”