How the gig economy impacts employment law

In this month's Bookshelf, The Global Legal Post's Editor-At-Large, Dr David Cowan, picks two books analysing the future of work and how it impacts employment law.

Mohd KhairilX

From this month’s Bookshelf, we take two very readable academic books looking at the future of employment law in different and stimulating ways, drawing law, economics and political philosophy together in the analyses. Jeremias Prassl, of the Law Faculty at the University of Oxford, looks at the need for a consistent and innovative approach to workplace regulation in the gig-economy. Elizabeth Anderson, a political philosopher at Ann Arbor University, explores the use of power in the workplace and raises concerns about what she sees as the growth of labour “unfreedom.” Both books offer a strident call for a focus on worker protections, and both are important as the legal profession, policy-makers and academics seek to tackle the legal implications of the changing nature of the workplace. 

Humans as a Service: The Promise and Perils of Work in the Gig Economy

By Jeremias Prassl, Magdalen College, University of Oxford

Published by Oxford University Press, 2018

The gig economy

In a Financial Times column The taxi unicorn’s new clothes, journalist Izabella Kaminska explains mobile technology by stating the ‘only innovation in hand is the fact that the old “You rang m’Lord” system has been transformed into a “you hailed me on your app m’Lord” one instead.’ In Humans as a Service, Jeremias Prassl says this is not far from the truth in the new gig economy. In this readable, informative and clear assessment of the impact of the gig economy, Prassl takes us through the philosophical, economic and legal problems that need to be negotiated as this growing economic trend impacts us all. There are arguments about what the gig economy means and how big it is and will be. Some look at the trends and see this as the future of all things economic, whilst others find themselves looking into the glass darkly.

Employment regulation is key

The central claim of Humans as a Service is that most gig-economy work falls within the scope of employment law, which can benefit us all. This makes employment regulation key to sustaining future on-demand services. Prassl explains that proponents of the gig economy believe that “instead of provoking mass unemployment, treating gig workers as employees and platforms as their employers will create a framework for productivity and growth.” How the law should respond to this on-demand economy, he argues that regulators can and must bring this work within the scope of Employment Law, adapting existing norms where necessary, in order to protect both customers and workers. Finally, he explores the wider implications of the gig economy for markets and consumers, assessing opportunities and challenges, and in the work environment of the future ponders how it can be made sustainable.

Numerous new terms

There are numerous new terms to understand, which have come into everyday language with little real assessment of their import – Prassl complains of “doublespeak.” Words and terms like crowdsourcing, disruptive innovation, a sharing revolution and micro-entrepreneurship, entice us with a popular, shared sense of an exciting journey into the future. They also entail a reworking of traditional words and terms like work, job and theory of the firm. Prassl suggests such terms “often obscure the realities of highly precarious work and the strict algorithmic surveillance and control to which workers are subject.” He examines whether the gig economy is fundamentally different to existing models of work and if can justifiably be kept outside the scope of employment law, as many technology platforms claim. Far from being radically new, the book argues that the gig economy is but the latest example of labour market practices that have existed for centuries.

Labour is not a comodity

Prassl cites Lukas Biewald, CEO of the platform CrowdFlower, where he makes the business case: “Before the Internet, it would be really difficult to find someone, sit them down for ten minutes and get them to work for you, and then fire them after those ten minutes. But with technology, you can actually find them, pay them a tiny amount of money, and then get rid of them when you don’t need them anymore.” Not everyone is quite as enthusiastic. Prassl reminds us that “nearly a century ago, when the United Nations’ International Labour Organisation (ILO) was founded, the High Contracting Parties agreed upon a series of guiding principles ‘of special and urgent importance’. First amongst them was the idea that ‘labour should not be regarded merely as a commodity or article of commerce’.” The US National Employment Law Project (NELP) has also been critical of gig-economy work, highlighting problems relating to ‘micro wages’ and exploitative working conditions. 

Shifting business risk

Unpredictable consumer demand, Prassl suggests, makes flexibility in the gig economy illusory, explaining invasive data collection denies users privacy and “workers are increasingly isolated and left to compete against each other.” If you are a worker whose labour has become a service to be bought and traded like any other commodity, then we are into some areas of grey, and others of the black and white variety. Employers get the flexibility in meeting staffing needs, but workers often have little security or protection. Of most concern perhaps is the notion that platforms can shift a considerable level of their business risk and cost onto others. Regulatory arbitrage, externalities, and asset misallocation all skew the playing field in favour of platforms and they impose cost on everyone else as well. 


Employment law, or rather the evasion of employment law, Prassl explains is at the core of the gig-economy business model. He states, “recourse to large pools of on-demand workers is ‘the economic substance’ of platforms’ transactions. Employing a large workforce creates responsibilities—which impose cost on people-intensive business models. In return for the benefits of control over their workforce, employment regulation places a financial burden on employers, ranging from social security contributions, minimum wage laws, and sick leave, to health and safety regulations and union bargaining. Stable employment relationships are also associated with indirect cost, because the risk of fluctuations in demand cannot be offloaded onto individual workers: a bus company’s drivers ply their routes and receive wages regardless of whether passengers are on board or not.”

Entrepreneurial freedom

Policymakers have many options open to them. Including legislative denials of employment status, arguments in favour of new ‘third status’ employment laws, regulatory safe harbours and industry self-regulation. Prassl argues these options “all share a fundamental scepticism of existing regulation: are existing laws a straitjacket holding back innovative new business models? Why should we let employment law put fetters on entrepreneurial freedom?”

Unique potential

This leads the lobbyists to making hay trying to influence where this regulatory framework will take us, but Prassl suggests “one common goal emerges: to deny workers’ employment status and ensure that platforms are defined as mere intermediaries.” Employment law has a unique potential to level the playing field, leading Prassl to conclude “If we want platforms to bear the cost of their operations, we have to ensure that they obey the rules like any other business. Given the centrality of a large, on-demand workforce to the gig business model, employment law has a key role to play.

The future of work

Throughout the book, Prassl offers a good survey of the literature, and Humans as a Service should guide you to other useful avenues of thought as we seek to rethink employment law for the future of work. At its heart Prassl believes it is essential in tackling the future of work to ensure fundamental protection for workers themselves. This requires more creative approaches he concludes, stating “It’s a daunting task—but one we cannot afford to ignore.”

Private Government: How Employers Rule Our Lives (and Why We Don’t Talk about It)

By Elizabeth Anderson

Published by Princeton University Press, 2017

 Private Government is a welcome call to bring workplace governance back into political theory and discourse, as well as legal reflection. Elizabeth Anderson has produced a provocative argument, which suggests workplace governance has become “the province of members of marginalized academic sub- fields — labour historians, labour law scholars, and some labor economists — along with a few labor lawyers and labour activists.” Given the importance of the workplace, in which the average person spends a third of their life, it is perhaps time governance was given a higher profile.

Private autocratic power

Anderson argues it is not government that rules our lives, but the private autocratic power of the workplace which pervades “our work and off-hours lives.” She offers an historical interpretation of the origins of the market and labour relations, though she omits a great deal of the history of labour relations. She argues the market came from the ‘Left.’ To justify a statement that may come as a surprise to neoclassicists and others, she explains the Levellers, Adam Smith, Chartists and Thomas Paine all anticipated a future of small–scale proprietorship and free self-employment. She discusses workers’ freedom and unfreedom in the context of employment relations today. Being an American academic she has focused on the rise and fall of the New Deal system of collective bargaining, but her points will resonate with readers in a British and European context as well. The attempts to balance workers’ freedom and employer power has created a legal environment where the law makes a trade off between the unions as bargaining entities and their ability to maintain majority support.

Labour law needs greater attention

The changing emphases of labour law and employment law has led, Anderson explains, to the latter burgeoning and putting the former in the shade. Her argument leads to the inevitable conclusion that labour law needs greater attention, and employment law should be less powerful. Howver, she is light on what she calls “a few exceptions” to the notion of employment at will in America, which principally applies to discrimination, family and medical leave, and labour union activity, which skews the discussion of the formal legal constraints on employer power. There are a significant number of exceptions to employment at will, and they have substantial legal remedies.

Markets are best

Neoclassical economic theory is a major target for her, and saying the market is a thing of the “Left” was, maybe, just her way of startling or disarming her foes. Economists argue that markets and employment exit rights, rather than legal protections and participatory mechanisms, are the best way to guarantee workers’ freedom and curtail employer power. There are a number of other points to dispute, and these are usefully included in the four responses to her arguments, from cultural critic David Bromwich, economist Tyler Cowen, historian Ann Hughes and philosopher Niko Kolodny. It might have been more comprehensive to have included a legal academic or practitioner responding to her as well.

Union decline

Anderson wonders where the political pressure for solutions will come from in the wake of union decline. She explains “Labour unions have long been the main vehicles for workers’ demands for voice, dignity, and decent rewards at work and in the polity. But unions — especially in their role as exclusive collective bargaining agents — have largely lost workers’ allegiance and confidence.” She adds, “Any campaign to curb employer autocracy at work will be doomed if it is entirely about unions and their agenda for labour law reform. But it will also be doomed if it ignores unions and is not championed by them. Unions in the twentieth century succeeded in crafting a solution to the problem of employer autocracy that worked reasonably well for millions of workers for a few decades.”

Engaged workers

It is not uncommon for academics to be accused of being out of step with the reality of the workplace, and Anderson is in danger of falling into this particular trap. Changes in employee engagement is undergoing some dramatic changes, with models based more on empowerment for employees and an improving balance between the leaders and the led. The reason for this is simple, and speak more to the person than ideology – namely, engaged workers are more productive, Engagement is not about happiness, it is about understanding and acknowledgement. This said, there has to remain concern that a growing number of workers are not adequately covered by employment laws, if at all, and others who suffer violations of minimum labor standards who cannot find satisfaction from firms whose contracting practices inevitably lead to such violations. This has to be part of the dialogue of employee engagement in the workplace of the future.

Public and private governance

We should also note that the relationship between public and private governance is more complex than Anderson has explained in her book. Public government uses “private” power to engineer social and economic changes through laws, regulation, taxation and promotion of corporate responsibility, including protection from discrimination and retaliation. For instance, social rights have been progressively enforced for LGBT interests through workplace benefits and pensions. There is a sense in which she is fighting yesterday’s battles. In the Gig economy the idea of bureaucratic collective bargaining makes less sense, unless you want to unionise robots perhaps. It is important here that for all interested parties seeking solutions, it’s good to talk.


EU Regulation of E-Commerce: A Commentary

Elgar Commentaries series

Edited by Arno R. Lodder, Professor, Vrije Universiteit Amsterdam, the Netherlands and Andrew D. Murray, Professor, London School of Economics, UK

Edward Elgar, Cheltenham, UK & Northampton MA, USA, 2017

The ever-changing technological landscape of the economy has been a keen interest of the European Union for the past twenty years, as the EU seeks to tackle the regulatory needs of e-commerce. This systematic and useful commentary addresses the key pieces of EU legislation in the field of e-commerce, including the E-commerce Directive, the Services Directive, the Consumer Directive, the General Data Protection Regulation, and the eID Regulation. The commentary provides up-to-date analysis of decisions of the Court of Justice and the Commission, the latest directives and regulations in the field of e-commerce, and features detailed tables of cases and legislation. The authors are drawn from a pool of leading scholars and practitioners from across the EU. This is a concise guide, with a clear and accessible layout, to the regulations and issues relating to e-commerce, and will be useful for specialists, academics and advanced students alike.

Employment Law: The Essentials

David Lewis and Malcolm Sargeant

Kogan Page, London, 2017

If employee engagement is to improve, and firms are to tackle the challenges ahead, it is important to educate non-legal participants as effectively as possible.  This includes promoting readable and accessible books in the area of employment law. Legal counsel would do well to recommend this guide to their colleagues in Human Resources, corporate  leaders and managers tackling employment policies, and, students. David Lewis and Malcom Sargeant in Employment Law, a core textbook for the Chartered Institute of Personnel and Development (CIPD) Level 7 Advanced Employment Law module, takes the reader step-by-step through the essentials. Topics include the formation of the Contract of Employment, discrimination, health and safety in the workplace, unfair dismissal and redundancy. Good visual design and clear writing makes this guide easy to follow, with helpful online resources. The fast-paced changes in technology and employment law means non-specialists need to keep up, and this new 14th edition includes the Trade Union Act 2016 and the Enterprise Act 2016. There is also new content on the enforcement of tribunal awards, zero hours contracts and migrant workers, and provides an up-to-date analysis of anti-discrimination law, the national living wage and the 'Transfer of Undertakings (Protection of Employment) Regulations 2006' (TUPE).

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