The Self-Employment Justice Gap: The case for online dispute resolution

Key findings

18.5%

of workers in London are self-employed, in 2019.

An online

dispute resolution service could address the self-employment justice gap.

Solutions

could be offered stage-by-stage - from personalised advice to arbitration - entirely digitally without the need to use the courts saving workers time and money.

This report from Fabian Society and funded by Trust for London makes the case for an online dispute resolution (ODR) service for self-employed workers and explores the role such a service could provide.

It shows that self-employed workers face challenges distinct from employees and argues for new systems and processes to address the consequent justice gap. In 2019, 15 per cent of workers across the UK were self-employed – and 18.5 per cent of workers in London.

“This report highlights the challenges faced by low-paid self-employed workers when facing injustice in the workplace. Self-employment makes up nearly a fifth of the capital’s economy and is growing. These workers are often economically vulnerable, with a high proportion having lower than average earnings and few, if any, pension savings. It is vital that self-employed workers have access to justice.”
Bharat Mehta, Chief Executive, Trust for London
“The growth of the gig economy and other new forms of self-employment means we need to act now to help the UK’s self-employed workforce secure their rights without having to go to court. The Covid-19 pandemic has laid bare the inadequate protections available to the self-employed. Not only do contract workers have fewer rights, they lack the mechanisms available to employees to ensure they are enforced. This is an issue not just for workers but for the economy as a whole. The Fabian Society is calling on the Justice Secretary to establish an ‘online dispute resolution’ service to address the self-employment justice gap. By stopping disputes escalating, our plan will save workers, businesses and the courts’ time and money, while demonstrating politicians’ commitment to the self-employed.”
Andrew Harrop, General Secretary of The Fabian Society

Key findings

The report sets out five key issues limiting access to justice for the low-paid self-employed:

  • Difficulty accessing courts and tribunals: People seeking to challenge their self-employed status and (genuinely) self- employed workers seeking to uphold their rights have to go to a court or employment tribunal and argue their case. It
    is neither effective nor equitable to require an individual to have to make use of time-consuming legal remedies when more straightforward processes are achievable.
  • Legal aid cuts: Legal aid is no longer available in employment tribunal cases (except those involving alleged discrimination) which makes it much harder for the low-paid self-employed to access justice. Wider reductions in legal aid funding have also led to a steep decline in the availability of legal advice in general and there are now advice ‘deserts’ across the UK where people cannot access experts to explore whether they may have a case.
  • Making small claims: Self-employed workers chasing late payment from an engager need to apply to the courts when they have exhausted informal processes (this is usually through the online ‘money claim’ service). The lack of a simple dispute resolution service exacerbates what is already an unequal power relationship with the contracting party, where workers are often dependent upon their good will for future work. Many low-paid self-employed workers will conclude that the small claims court is not a practical or viable option.
  • Unclear/non-existent contracts: Many low-paid self-employed workers do not receive written contracts from their clients and consequently can find their terms of engagement are unclear and difficult to enforce. The use of verbal agreements also frequently makes redress untenable if it relies on proving mutual agreement.
  • Lack of workplace processes and protections: With traditional employment, workers are often able to use internal company mechanisms (eg HR policies and departments) or receive support from a trade union to resolve problems at work. People with ‘self-employed’ status do not have employment law protections beyond minimal anti-discrimination and health and safety regulation, but they also usually lack institutional machinery to support them. Although trade unions are taking active steps to expand their support, self-employed workers will never be able to access the same workplace protections and processes available to employees.

Key recommendations

The report outlines key design requirements for an ODR system for self-employed workers and considers the services it should be able to provide. The key stages proposed are:

STAGE 1: PERSONALISED ADVICE

STAGE 2: INITIATE ACTION

STAGE 3: NEGOTIATION

STAGE 4: CONCILIATION

STAGE 5: ARBITRATION OR ADJUDICATION

STAGE 6: RESOLUTION OR ENFORCEMENT

Download report

The Self-Employment Justice Gap: The case for online dispute resolution

Full report 353.5 KB