The gig economy's three-way split: employee, worker or self-employed

Most legal systems draw one line: you are either an employee or you are in business for yourself. Britain draws two. Between the employee, with the full stack of employment rights, and the genuinely self-employed contractor, with almost none, sits a third creature invented by statute: the "worker". That middle tier — defined in section 230(3)(b) of the Employment Rights Act 1996 and known to lawyers as the "limb (b) worker" — is where the gig economy's decade of courtroom warfare has been fought, because it is precisely the category platforms have spent millions arguing their riders and drivers do not occupy.

The stakes are concrete. An employee gets everything: protection from unfair dismissal after two years' service, statutory redundancy pay, sick pay, parental leave rights. A worker gets a narrower but expensive bundle — the National Minimum Wage, 5.6 weeks' paid annual leave, rest breaks under the Working Time Regulations, pension auto-enrolment and whistleblowing protection. A self-employed contractor gets the contract they signed and little else. For a platform with tens of thousands of couriers, the difference between "self-employed partner" and "worker" is a payroll liability measured in hundreds of millions of pounds a year, plus back-claims for unpaid holiday stretching over years.

The test is not what the contract says. That principle was settled in Autoclenz v Belcher in 2011, where the Supreme Court held that tribunals may disregard written terms that do not reflect the true agreement — a direct response to contracts drafted to describe car valeters as independent businesses when everyone knew they were nothing of the sort. Tribunals instead weigh control, integration and mutuality of obligation: who sets the price, who bears the commercial risk, whether the individual can send a substitute, whether they can build their own customer base.

Uber BV v Aslam, decided by the Supreme Court in February 2021, applied that reasoning to an app. Uber fixed the fare, dictated contract terms, penalised drivers for declining trips, controlled the route through its navigation and disciplined performance through the star-rating system. Drivers could not negotiate, could not undercut, could not develop goodwill of their own. On those facts they were workers — and, crucially, the court held that working time ran from the moment a driver logged on within their licensed territory and was ready to accept trips, not merely while a passenger sat in the back. Uber subsequently reclassified more than 70,000 UK drivers as workers, with minimum wage and holiday pay calculated on that footing, though it computes working time from trip acceptance, a narrower reading that continues to generate claims.

Why Deliveroo riders lost the same fight

Deliveroo reached the opposite destination. In November 2023 the Supreme Court upheld the Central Arbitration Committee's 2017 finding that Deliveroo riders were not workers, for one decisive reason: their contracts contained a genuine and unfettered right of substitution. A rider could hand a delivery to someone else, before or after accepting it, without seeking approval — and some actually did. Worker status requires an undertaking to perform work personally, so a real substitution clause is fatal to the claim. The contrast with Pimlico Plumbers v Smith (2018), where a plumber's ability to swap jobs only with another Pimlico operative was held too narrow to defeat personal service, marks the line platforms now draft towards.

The three-way split has a further wrinkle: HMRC does not recognise it. Tax law knows only employed and self-employed, so a limb (b) worker can owe tax as a sole trader while claiming holiday pay as a worker — two regulators, two answers, one person. The 2017 Taylor Review of Modern Working Practices recommended renaming workers "dependent contractors" and aligning the tax and rights boundaries; successive governments consulted on it and legislated for none of it. Enforcement therefore still runs through individual employment tribunal claims, three-month time limits and multi-year appeals, which is why status in the gig economy has been settled fleet by fleet, courtroom by courtroom, rather than by any single rule anyone can look up.