Urban Outfitters and Dreams face backlash over gig worker hiring and pay

Major retailers Urban Outfitters and Dreams have come under fire for allegedly hiring through gig economy apps, raising concerns that some workers may be earning less than the National Minimum Wage.

As a result, the Trades Union Congress (TUC) has called on the UK Government to fast-track reforms to better protect gig economy workers and close loopholes that allow employers to avoid basic employment rights.

Platforms such as Temper allow businesses to hire short-term temporary staff, but critics say the system can leave workers vulnerable to delayed payments and fees that may reduce wages below the legal limits.

With millions of people now relying on gig work as their main source of income and the introduction of the Employment Rights Act, it begs the question whether smaller firms can truly benefit from gig economy apps, or if they’re just a legal headache waiting to happen.

Companies facing scrutiny over gig economy hiring

Major retailers Urban Outfitters and Dreams have been criticised for reportedly using the Temper gig economy app to hire temporary workers.

The platform, which has over 487K workers across the UK and the Netherlands, connects businesses with temporary staff for short-term roles.

According to The Guardian, Urban Outfitters had been advertising roles on the platform — such as stock and sales assistants — paying £12.50 an hour. Similarly, Dreams allegedly advertised a number of delivery driver positions, ranging from £12.71 to £15.14 per hour.

Meanwhile, Colicci Cafe, a family-owned business that runs cafes in London’s Royal Parks, were also reported to have offered barista shifts on the app for £12.50 an hour, though a spokesperson claimed the hourly rate was an error and has since been corrected.

But while the advertised positions were above the current National Minimum Wage (£12.21 per hour), workers using the Temper platform would have to wait 30 days to receive payment. If they didn’t want to wait, they’d have to pay a 2.9% fee, which could bring their wages below the NMW threshold.

Last year, several retailers, including Uniqlo, Lush, and Gymshark, stopped using gig economy apps following concerns over workers’ rights, like the minimum wage, sick leave, and holiday pay.

“Cynical bosses should not be able to exploit gaps in the law to deny workers proper pay and conditions.” Paul Nowak, general secretary of the TUC, told The Guardian.

“The historic Employment Rights Act will bring welcome new protections. But without action on bogus self-employment, bad employers will make greater use of legal loopholes and talent platforms to deny workers their rights.”

Why are gig economy apps risky business?

The UK’s gig economy has grown dramatically over the last decade. Today, around 5% of the population — equating to approximately 1.6 million people — are working in gig roles in the country.

The gig economy is useful for workers as it offers flexibility in when and how they work. For businesses, it provides access to a flexible workforce — particularly useful for smaller firms that need more staff during busy periods, but can’t afford to hire more permanent employees.

However, with 20% of gig economy workers now considering it their main source of income, small businesses risk legal challenges if they hire staff this way without basic employment protection.

Not only are rights at risk, but hiring through gig economy apps consistently means potentially underpaying taxes like National Insurance Contributions (NICs) and workplace pension costs. And for smaller businesses, this could result in hefty penalties from HMRC, including 100% of the unpaid contribution with added interest.

Moreover, as with hiring a full-time employee, businesses must also hire gig workers with the same rights, following the introduction of the Employment Rights Act.

This includes offering an employment contract with guaranteed hours to those who have worked regular hours over a 12-week period (unless a worker chooses to remain on a zero-hour contract), complying with “day-one rights” (including sick pay and paternity leave), and paying a cancellation fee to the employee if you cancel or move a shift at short notice.

How can your business use gig economy apps responsibly?

Using gig economy apps to hire workers isn’t illegal, but they must only be used to meet short-term or changing demand, rather than as a permanent workforce.

Gig workers should be hired for tasks that are flexible or project-based, such as seasonal demand or one-off jobs, rather than relying on them as a long-term source of labour. This reduces the risk of worker exploitation and helps businesses comply with employment law.

Businesses should also ensure gig workers are paid fairly, including guaranteeing that they earn at least the minimum wage once expenses are taken into account. 

For example, if you were to use a platform like Temper to hire short-term workers that charge a fee for early payment, it’s important to offer an hourly wage that doesn’t get reduced below the minimum wage when this fee is deducted. 

Alternatively, simply hiring temporary agency staff can give you the same kind of flexibility as gig economy apps. Hiring through a reputable agency can give you access to trained workers for busy periods, and they will handle payroll, taxes, and compliance for you. If you want to hire directly, taking on temporary employees will give you more control over scheduling and ensure employment rights are applied correctly.

Whatever way you want to hire seasonal workers, following requirements from the Employment Rights Act will keep your business compliant, but also protect your reputation and maintain trust with both workers and customers.