How far must gig economy businesses go to check on the background of those who provide their services through them? Transport for London cited concern over Uber’s background checks on drivers as one of the reasons to remove Uber’s operating licence in London. That situation is complicated by TfL’s regulatory requirements, but some of the key issues for platform and gig economy operators centre on the employment status of individuals who are providing the services (we’ll call them giggers in this article) and whether the business is operating as an employment business, employment agency or neither. These are the issues that have been in the press, caught the eye of the public and go to the heart of gig economy models.

In light of some recent developments regarding agency workers, we felt it might be time to turn our attention to some of the tricky issues facing gig economy businesses: what are operators obliged to check, what should they be doing, but – if giggers are not employees - is it a good idea to run them at all?

A reminder about status

Whilst the purpose of this article is not to discuss employment and business status, this does to some extent guide how you should approach right to work (RTW) and background checks. Below is a brief summary, but these are areas of law under some scrutiny at the moment and operators should keep their model under review..

  • Employment status: Individuals may be employees, workers, or self-employed independent contractors.
    • Employees have the highest level of protection; for example, only employees can claim unfair dismissal.
    • Workers are afforded some basic protections, such as in respect of NMW and working hours.
    • Independent contractors, given that their relationship should be more of a commercial one, have very little by way of employment protections. The courts, as we have seen, are looking at the reality and substance of the relationship, and are not particularly interested in labels and paperwork (particularly where they believe this contradicts the nature of the relationship in practice).
  • Employment business or agency: Employment businesses and employment agencies (despite confusion in terminology) are distinct models as follows:
    • employment business: involved in supplying persons in the employment of the person carrying on the business, to act for, and under the control of, other persons in any capacity (often referred to as an “agency”, and providing temporary workers).
    • employment agency: involved in providing services for the purpose of finding workers employment with employers or of supplying employers with workers for employment by them (otherwise known as a recruitment agency and providing candidates for permanent roles).

The two models carry different obligations and compliance requirements, some of which are relevant for RTW and background checks.

Right to work checks

Businesses are currently required by law to carry out RTW checks on all employees and potential employees (regardless of their nationality) to confirm they have permission to work in the UK. Failure to do so means that the business has no defence against charges that they are illegally employing staff which carries significant sanctions, including civil penalties of up to £20,000 per illegal worker, as well as criminal sanctions for directors and for individuals found to be knowingly working illegally. Furthermore, companies found to have been employing staff illegally are likely to face negative publicity in the press and social media.

In line with an August 2017 Home Office policy paper, there is now a suggestion that RTW checks should extend to workers (in addition to employees) and self-employed contractors. The paper also suggested that there are “compelling reasons” for businesses to checks if their contractors carry out such checks. If this is correct, this would mean that operators should also be carrying out RTW checks on their giggers, (see here for more details []) and be able to demonstrate their compliance with the rules with the businesses they are contracting with.

This expansion of the duty would have a number of important ramifications:

  • If giggers are deemed to be employees of the operator, the operator must carry out compliant RTW checks or run the risk of the action and the sanctions mentioned above.
  • If giggers are held to be workers of the operator, then the operator should carefully consider whether to run such checks. Think carefully about your model, and whether giggers are in fact likely to be workers, even if you do not refer to them as such.
  • If your business is operating as, or is deemed to be, an employment business, you will be required to carry out compliant RTW checks.
  • If giggers are deemed to be agency workers, operators are likely, in line with this new Home Office guidance, to be required to carry out checks to evidence their right to work.
  • End users, customers and clients (“clients“) are also likely to be under an obligation to check that the correct RTW checks have been carried out, under the new guidance.

If, having conducted your review, you consider that you are not under a duty to carry out RTW checks, or are concerned about doing so, there are couple of points to note.

  • We recommend that you check your contracts to see whether these allocate risks and liability for costs associated with illegal workers. These clauses may need to be renegotiated.
  • If as an operator you carry out RTW checks, might this suggest you are treating individuals as workers? This may have implications for your business model. Do weigh up the risks before implementing such checks.
  • If you intend to outsource such checks, do be aware that this may not give you the statutory defence needed to protect your business (although if this is not your primary concern, the protection given may be sufficient).
  • Completing checks may mean you end up with information that would make you responsible for policing the leave to reside and work and the documentation of giggers. This can be an onerous task.

The main driver for carrying out RTW checks, if the Home Office policy is adopted, is likely to be to enable you to manage your reputation and compliance concerns. RTW compliance remains a sensitive political issue and an ongoing area of focus for the UK government. Consumers are also highly sensitive to such issues. Given this, in practice these may be overriding reasons to start to complete RTW checks.

This remains a developing area. Operators should continue to review their model and policy developments in light of the potential sanctions and risks set out above.

Criminal record checks

The primary reason for carrying out criminal record checks is likely to be client safety and reputational risk. Obtaining and providing clients with sufficient information to understand the risks is important both in managing safety concerns and reputational risks. There may also be additional concerns where giggers are entering the workplace or home of clients.

The law attempts to balancethe need to rehabilitate people with criminal record, and the overriding need for disclosure in certain situations and to protect certain (vulnerable) groups from those who have committed certain offences. Operators should keep this in mind when deciding what steps to take with regard to criminal records. Employers are not (with certain exceptions) required to to carry out criminal record checks, but the law enables operators to do so in certain circumstances.

There are two ways an operator could seek information about a gigger’s criminal record:

  • voluntary disclosure; and
  • official criminal record check via the Disclosure and Barring Service (the DBS).

Voluntary disclosure: There is no express prohibition on an operator seeking voluntary disclosure from a gigger about their criminal record (regardless of their status). It does, however, rely on the gigger disclosing information accurately and honestly, and this may have limited effect as a defence (whether in law, or the court of public opinion) if something goes wrong.

DBS check

There are three types of DBS check you can carry out, which all require the consent of the gigger:

  • a standard check, which shows spent and unspent convictions, cautions, reprimands and final warnings
  • an enhanced check, which shows everything in a standard check, and also any information held by local police that’s considered relevant to the role
  • an enhanced check with barred lists, which shows the same as an enhanced check, plus whether the applicant is on the list of people barred from doing the role

Not all roles are eligible for official checks through the DBS and neither are all employers entitled to make such checks. Operators should carry out an enhanced check for certain roles (primarily those working with children and vulnerable adults, regulated occupations, professions those upholding the law or national security).

When deciding whether to carry out criminal records checks, consider the following:

  • Clients’ safety should be a big concern for operators, and carrying out criminal records checks is a way to demonstrate to current and potential customers that the operator takes these risks and its responsibilities seriously.
  • If an operator carries out criminal records checks, it could appear to be treating individuals as workers or employees which may have implications for its business model, so weigh up the risks before implementing such checks. The safer way may be to provide access to a service providing DBS checks.
  • You may also end up with information that would then make you responsible for policing the giggers – think about what you represent to clients on this, the level of risk given the nature of the services being provided, and whether you are in a position to monitor and carry out such checks in practice.

Conclusion – Take away points

  • Consider your business model, and particularly employment status and whether you are operating as an employment business or agency. Consider any obligations which would apply to your business or giggers as a result.
  • Whilst you may not currently be under a legal obligation to carry out RTW or criminal record checks, consider whether doing so or requiring such checks to be carried out could help protect your business and reputation.
  • If you don’t take steps, your clients may be responsible for the checks and consequences of failing to comply. Think about whether you want to assist or pass on the burden; either way, it would be best to have a firm position on this risk, make this clear to your clients and document it.
  • If your business facilitates individuals being invited into client’s homes or workplaces, there may be increased reputational and security risks where giggers have not been checked. These could have serious implications for your business.
  • Consider your terms of business, website / app and marketing materials – do client or could they have an expectation that certain checks are carried out? If your clients may assume that giggers are vetted, taking into consideration the services involved, it is worth making clear what steps you take. You don’t want to be relying on small print in the event of an incident.
  • Clients are unlikely to ask about criminal record checks meaning the risks are unlikely to be picked up by anyone else. Even if you don’t say, or imply you will, should you be taking steps to protect your clients?
  • Consider whether you are in a position to carry out checks – given the disparate and flexible nature of gig economy activities, how will you carry out compliant RTW checks, for example?
  • Consider the implications for your business. Can you facilitate checks without taking responsibility? For example outsourcing RTW checks and providing a route by which giggers can obtain a DBS check at their own cost?
  • Consider requiring all giggers to provide a current DBS check (carried out within the last 6-12 months) before they are permitted to access postings.
  • Consider if and how you will share the information generated by the check with clients. Will you need the consent of the gigger to do so, and if so how you will obtain their consent?

The expansion of additional regulation to workers is likely and the increasing requirement for companies to self-police and ensure good practice. Taking steps to understand the checks, and consider how to manage them as part of operating your business, is increasingly important.