Written evidence from Professor Catherine Barnard and Dr Alysia Blackham (WOW 03)

Discrimination protection for the self-employed is limited, covering only access to self-employment and not the exercise of self-employment.

• Equality law has significant potential to assist the self-employed during the entire life cycle of self-employed work.
• Equality law should not be extended to decisions made by private parties (purchasers) in the domestic context as to whose services to hire.
• However, other ‘private’ decisions taken in the context of a business undertaking, whether for profit or not, should be covered by equality law.
• We recommend amending the Equality Act 2010 (UK) to protect the self-employed from discrimination by those engaging services in the course of a business undertaking.

Introduction

1. This submission concerns the inquiry by the Commons Select Committee on Business, Energy and Industrial Strategy on the future world of work. It responds particularly to the following terms of reference:

1. Is the term 'worker' defined sufficiently clearly in law at present? If not, how should it be defined?

• What should be the status and rights of agency workers, casual workers, and the self-employed (including those working in the 'gig economy'), for the purposes of tax, benefits and employment law?

3. What specific provision should there be for the protection and support of agency workers and those who are not employees? Who should be responsible for such provision – the Government, the beneficiary of the work, a mutual, the individual themselves?

2. The authors of this submission are discrimination law academics who have researched and published widely in the fields of discrimination and equality law.

Equality protection for the self-employed’

3. The very concept of employment rights for the self-employed is already an oxymoron. Why should the self-employed, a group seen as independent and autonomous, need or deserve employment protection? Under the Equality Act 2010 (UK), employment protections against discrimination are, by definition, only offered to employees and applicants for employment.[1] Provisions relating to discrimination against ‘contract workers’ only apply to ‘principals’ who make work available for an individual who is ‘employed by another person’.[2] Thus, provisions relating to contract workers will also not protect the self-employed from discrimination.

4. Yet, those who describe themselves as self-employed often manifest many of the characteristics of employees – they may in practice be dependent, have inferior bargaining power and risk exploitation. Even those who do not match this description still need to have access to the labour market: there is no point in being ‘self-’ without being ‘employed’ (ie without work).

5. The numbers of self-employed are increasing, and women feature prominently in that group. In the UK, the rise in total employment between 2008 and 2014 was predominantly among the self-employed, bringing the proportion of self-employed workers to 15 per cent of the labour force, the highest level in 40 years.[3]

6. The evidence suggests that male and female experiences of self-employed working are different. For example, Marlow argues that gender impacts upon women’s experiences of self-employment, and affects the initiation, development and daily management of small firm ownership.[4] Thus, gendered structural constraints continue to limit women’s success as entrepreneurs.[5] Similarly, previous studies of US small businesses have found that female-owned businesses have lower survival rates, profits, employment and sales than male-owned businesses.[6] Fairlie and Robb explain the lower success rates for female owned businesses due to women having less start-up capital, less human capital, and less prior work experience in a family business.[7]

7. The nature of self-employed work also varies by gender. In the UK, the most common roles for the self-employed in 2014 were in construction, taxi driving and carpentry,[8] traditionally male-dominated industries. While male self-employed workers are largely employed in skilled trades, many female self-employed are working in unskilled, low-paid areas. For self-employed women in the UK, the top three occupations in 2014 were as cleaners and domestics, child-minders and hairdressers.[9] These roles are generally associated with low levels of pay and benefits, poor conditions and limited skill and education.

8. Moreover, with the rise of new forms of working, including via online platforms like Airbnb, it is likely that the number of self-employed will carry on increasing. Empirical evidence shows that these online platforms tend to favour white men.[10]

9. This directly speaks to the concerns of equality law. Equality law has significant potential to assist the self-employed during the entire life cycle of self-employed work: from engagement, to terms and conditions of work, to termination. This is particularly important for self-employed women.

Existing equality protection

10. The scope of existing equality law reveals a lacuna: at present the self-employed can be the subject of the equal treatment principle (i.e. as service providers)[11] but may be able to invoke the protection of equality law only in vertical situations (i.e. against the state or emanations of the state). They cannot invoke it horizontally in private contexts, for example where a female plumber is not selected by a potential client from a website where she offers her services. Where the self-employed are covered by EU law, for example, equality directives generally only extend to ‘conditions for access to … self-employment’, rather than to the exercise of self-employment.[12] Likewise, under the Equality Act 2010, the self-employed may be protected from discrimination by trade organisations (s 57) or qualification bodies (s 53), but not the actual recipient of their services. In sum, service providers do not generally receive protection from equality law, though consumers or recipients of services often do receive protection.

11. The limitations of the personal scope of equality legislation (i.e. who can claim), and issues with identifying who the ‘duty holder’ might be in relation to the self-employed (i.e. who can be sued), are illustrated by the decision of the Court of Appeal in Halawi v. WDFG UK Ltd (t/a World Duty Free).[13] The claimant provided her services through an employee-controlled company to a service company. The claimant argued she was an employee, not of these companies, nor of the client of the service company, but of the company that managed the workplace for the client for whom her services were engaged (WDF). The Court of Appeal found that there was no subordination between the claimant and WDF, as the claimant was not subject to WDF’s control; she could appoint a substitute in her place, which was inconsistent with the personal performance of services; and she was not integrated into WDF’s business. Thus, the claimant was not an ‘employee’, and could not claim for discrimination.

12. In her judgment, Lady Justice Arden noted that this left her with

‘an uneasy feeling that the complex [corporate] arrangements [in this case] have the effect that the appellant has no remedy for discrimination even if she has been a victim of discrimination … , but [I] am bound to hold that the legal conclusions of the ET flow from the findings it made.’[14]

13. The EU’s Charter of Fundamental Rights also provided no assistance, as it did not affect the meaning of ‘employee’ or ‘worker’ in this context. Thus, complex work arrangements may prevent individuals from receiving protection from discrimination legislation. Indeed, even if the claimant in that case was self-employed, it is doubtful whether WDF would be a duty holder in this context.

14. The limitations of the material scope of the equality legislation in respect of the self-employed can be seen in Jivraj.[15] The UK Supreme Court said that the Equality Act 2010 would apply only to initial access to employment:[16]

‘[T]he expression “access … to self-employment or to occupation” means what it says and is concerned with preventing discrimination from qualifying or setting up as a solicitor, plumber, greengrocer or arbitrator. It is not concerned with discrimination by a customer who prefers to contract with one of their competitors once they have set up in business. That would not be denying them “access … to self-employment or to occupation”.’[17]

15. Thus the Supreme Court took the view that UK equality law should apply to the self-employed but only in respect of the initial question of access to self-employment, and not to subsequent engagement (i.e. exercise of the self-employment). So, a female self-employed plumber could complain if she was not allowed to register with, say, the Association of Plumbers on the grounds of her sex (access to self-employment) but she could not complain about discrimination by a potential client who refuses to hire her on the grounds of her sex (exercise of self-employment). In other words, in the case of the self-employed, the principle of non-discrimination applies vertically (to the state or emanations of the state) but not horizontally (to private parties).

Extending equality protection for the self-employed

16. We do not argue that equality law should be extended to decisions made by private parties (purchasers) in the domestic context as to whose services to hire. So, a private decision made by a domestic householder not to hire, for example, the services of a female self-employed plumber should not be covered by the prohibition of discrimination. This is the view that the Supreme Court came to in Jivraj and it is the conclusion we endorse. We think that the privacy interest (who I admit to my home, who I ask to provide me with a service for my personal benefit) ultimately trumps the application of the equality principle.

17. However, we want to emphasise the narrowness of this exception from the equality principle. We would argue it applies only to decisions taken in the most narrow, private, domestic context. Other ‘private’ decisions taken in the context of a business undertaking, whether for profit or not, should be covered by equality law. So if a small business decides not to hire female plumbers, the business should be subject to equality legislation. Further, once a home-owner lists their property on Airbnb, they should be bound by equality legislation, including in their decision as to who to rent out their home to and, for example, in choosing a cleaner to service the room between rentals.

18. Achieving this end will require amendments to the Equality Act 2010 (UK). In particular, we recommend amending the Equality Act 2010 (UK) to protect the self-employed from discrimination by those engaging services in the course of a business undertaking.

19. We realise that our view (that equality law should not extend to decisions of private parties in the domestic context) closes down the possibility of providing any remedy for the female plumber whose services are routinely not selected by potential clients from an online platform, or for a female Uber taxi driver who is not offered work, at least as against the individual using those services (the purchaser). However, this is also where we see scope for some creative development of the law. We see three possibilities.

20. First, one means of resolving this issue is by adopting a broad interpretation of ‘worker’ or ‘employee’ for the purposes of discrimination law, to include borderline cases (such as Uber). This would ensure all cases of sham self-employment are included within the existing judicial definitions. However, this does not address the broader issue of achieving equal treatment for the genuine self-employed.

21. Second, in situations where there is a pattern of discrimination, there may be scope for users of a particular platform (i.e. female Uber drivers) to argue that the provider (i.e. Uber) is discriminating against them in the provision of services. Uber’s answer may, however, be that it is not providing any services directly; it is merely providing a platform for the drivers to offer their own services, in much the same way as eBay provides a platform to buyers and sellers of goods. This is where a degree of judicial or legislative creativity may be required to facilitate a finding that Uber is actually offering a service by listing drivers on its app. 

22. Third, we suggest that the public sector equality duty (PSED) could be adapted and ultimately extended to apply to not just the public sector but to certain parts of the private sector. A positive duty on private sector entities to gather and release data on equality issues, and to adopt appropriate policies, may significantly extend the protection offered to the self-employed. So the duty holder would not be the client who has not hired a female plumber/taxi driver (i.e. the potential purchaser of the services) but the website or company facilitating the transaction. Instead of simply having an equal opportunities statement on its website, as Airbnb does, the company would be required to make a statement – of equal prominence – of, say, the number of women/men whose services are used as a percentage of the number of plumbers/drivers of that sex. This would require the duty holder to collect data. The duty holder could also be required to remove photos or personal descriptions about drivers or plumbers, unless there are objectively justified reasons to retain them (e.g. in the case of personal safety). They could even be required to have policies demonstrating what they are doing to eliminate discrimination.

December 2016