Discussing the “Gig Economy” and its Cypriot Employment Law implications

The distinction between self-employed individuals and employees working under a contract of employment is a central and recurring theme in the Cypriot Employment Dispute Tribunal's litigation as the recognition of the existence of the employment contract in work-related arrangements is essential for defining the rights, obligations and the legal framework that govern the relationship.

With this in mind, the key question arising when evaluating the status of person providing services to another is whether the specific relationship constitutes a contract of employment or merely an arrangement between a business owner and a self-employed individual. The answer to this question determines, what are the legal rights that will arise for the person that offers the services and whether the relationship will be governed by employment law provision or other provisions arising under alternative categories of laws.

Cypriot courts have extensively addressed this question since the establishment of the Republic in 1960, reaching a definitive ruling in 1978, when the Supreme Court in the Christofides[1] case gave a definitive answer to the question above by adopting the common law approach on the matter, after drawing from prominent UK court judgments, including the Global Plant[2] case and Market Investigations[3] case.

It is noted, that under the common law perspective the existence of an employment contract depends on the specific circumstances of each case, with a primary emphasis on the employer's "control" over the employee, often referred to as the "control factor." In this context, 'control' mainly refers to the employer's capacity to enforce essential employment conditions (e.g., working hours, workplace etc) to the other part of the relationship, who performs their duties under the directive authority of the employer.

Regardless the extended engagement of jurisprudence with the matter it is undeniable, that the issue remains far from being conclusively resolved, as the dynamics of employment and the way work is offered continually evolve over the years, necessitate an ongoing adjustment of legal frameworks to address new complexities and challenges. And in the current climate, one can reasonably argue, that no issue is more intricate and challenging than determining the employment status of “Gig Economy Workers”.

The term "Gig Economy Worker" typically refers to individuals offering services via online platforms like Uber, Deliveroo, and DoorDash. These platforms have globally transformed service delivery with innovative digital solutions, reshaping traditional business models and customer experiences. They've also blurred the lines between independent contractors and full-time employees, ushering in a new prominent employment model and raising the crucial question: "Should Gig Economy workers be granted 'employee' status or another protected employment classification or other status that is protected by employment legislation?”

Cypriot engagement with the question.

While the contemporary relevance of the platform workers’ issue in Cyprus is undeniable, the Courts have yet to actively engage with this matter and provide specific answers on the aforementioned question. However, recently adopted legislation has taken a broader approach to address the issue, aiming to mainly rectify the lack of transparency and predictability associated with certain contract types, that have become prevalent in the modern labour market and especially in relevance with the Gig Economy.

This legal transformation was primarily driven by the necessity to align the Cypriot legal system with EU regulations. Directive 2019/1152, which came into effect in 2019, replaced the earlier Directive 91/533/EEC, that had prompt in the enactment of Law 100(I)/2000 in Cyprus.

It is highlighted that, under the new legal framework, employers are now mandated to provide comprehensive written information about working conditions, surpassing the requirements of the previous relative legislation i.e., Law 100(I)/2000. Additionally, this framework introduces a range of employment rights and protections designed to address the challenges associated with low-transparency and low-predictability contracts, including zero-hour contracts, on-demand contracts and temporary contracts including:

(a) An upper limit of 6 months for probation periods, replacing the previous wide range of 6 to 24 months.

(b) The right to concurrent employment, granting employees the ability to work for additional employers outside their primary employment hours, provided specific justifications are met.

(c) The right to predictable work, ensuring that employees have specific rights, when work schedules are predominantly unpredictable. This includes working only during preset hours and days and being informed about work assignments within a reasonable time frame.

(d) The right to transition to a more predictable form of employment after six months of continuous service with the same employer, aiming to reduce the uncertainty often associated with certain work arrangements.

(e) Preventive measures against the abuse of on-demand employment contracts, limiting the total work duration for the same employer in a calendar year, the maximum continuous work period and the overall continuous work duration.

Despite the above, Cypriot jurisdiction still lacks sufficient real-world examples illustrating the practical implementation of these provisions and the extent to which they effectively address the issue. What's even more crucial, it also lacks clear guidance, especially from the Courts, that can definitively classify "platform workers" within either of the two categories provided in Cypriot legislation, i.e., the classification of "employees" and "self-employed" persons.

On the contrary, international jurisprudence and particularly United Kingdom's (UK) case law, has touched upon this issue in several cases, serving as a valuable resource for Cypriot stakeholders. With this in mind and the objective of providing clarity, we present below a concise analysis of relevant UK court rulings, which are frequently consulted by Cypriot courts for guidance.

The UK Paradigm.

In the United Kingdom, the Gig Economy has become a focal point for intense debates surrounding the classification of workers. In the most prominent case discussing the matter, Aslam v Uber[4], the Court was called to answer the crucial question of whether Uber drivers should be categorized as "workers" for local legislation purposes. The Court, before deciding on the matter, heard compelling arguments from both sides with the drivers mainly asserting that Uber drivers fit the "worker" classification according to local legislation (due to Uber's substantial control and supervision over their work, including setting fares, prescribing service quality guidelines and occasionally imposing penalties for performance issues) and Uber claiming that the status of an Uber worker is one of a "independent contractors", as they provide their work under a high degree of autonomy, which hinders them from meeting the threshold for “worker” status.

It is essential to underline, that this line of argument taken by Uber was successfully pursued by the employer’s side in the prominent Deliveroo[5] case, where it was decided by the High Court, that Deliveroo drivers were not to receive worker status, as their employment arrangements did not allow for a generalized right of substitution in such a way as to meet the "personal service" criterion, important for the realization of the employment relationship. To decide this, the Court leaned heavily on the precedent set by the Supreme Court's ruling in the Pimlico Plumbers[6] case, where it was stipulated that when a "generalized right of substitution" is in place, personal service is compromised.

Nevertheless, the Uber case took a different path from the Deliveroo case. The Court of Appeal, with its ruling, acknowledged that Uber drivers were not mere independent agents providing services for Uber, but were instead active participants in Uber's transportation business, affording them the status of “workers”. The Court arrived at this decision by meticulously assessing the nature of the services provided by the drivers, which were intricately defined and controlled by Uber.

Conclusion.

The emergence of the Gig Economy paradigm signifies a transformation in the legal landscape, not only on an international scale, but also within Cyprus. This transformation presents distinctive challenges for local stakeholders, who must navigate uncharted territory, contending with limited practical experience in this evolving legal terrain.

UK case law, along with other common law jurisdictions, can offer valuable insights into the matter. However, it’s crucial to consider these insights in light of the significant disparities between the legal frameworks of the UK and Cyprus, as UK law distinguishes among three categories of employee status (employee, worker and self-employed), whereas Cyprus maintains the more traditional binary classification between the employees and the self-employed.

The UK's approach to employment categorization highlights the need for adaptability of legal systems in response to the evolving work landscape. However, it also underscores the significant differences between UK and Cypriot employment law, emphasizing the paramount importance for Cypriot stakeholders to approach these provisions with caution, always considering the criteria established in Cypriot case law for determining the employment relationship.

In conclusion, it is essential to emphasise that the impact of the Gig Economy extends far beyond the legal framework and significantly influences the broader socio-economic landscape of Cyprus. As Cyprus grapples with this transformative shift, it is of utmost importance for policymakers, businesses and labour organizations to collaborate effectively and by developing innovative strategies for worker protection, expanding access to benefits and reinforcing support structures, ensure that the Gig Economy becomes a catalyst for economic growth, individual empowerment and the preservation of fairness and social cohesion.

[1] Cleanthis Christofides Ltd v Fund for Redundant Employees & Yiannakis Florides 1978, 1 C.L.R. 2008.

[2] Market Investigations Ltd. v. Minister of Social Security (1968) 3 All E.R. 732.

[3] Global Plant Ltd. v. Secretary of State for Healthy and Social Security (1971) 3 All E.R. 385

[4]Uber BV v Aslam [2018] EWCA Civ 2748 (19 December 2018)

[5] Independent Workers Union of Great Britain v Central Arbitration Committee and Deliveroo [2021] EWCA Civ 952.

[6] Pimlico Plumbers Ltd v Smith [2018] UKSC 29

Nicos Panayiotou, Senior Lawyer, George Z. Georgiou & Associates LLC

Authors Bio:

Nicos Panayiotou is a Senior Lawyer with extensive experience in Cypriot Employment Law and practice. He embarked on his legal career in 2009 upon being called to the bar and has since gained substantial expertise as a litigator and lawyer. In 2015, he transitioned his professional focus exclusively to Employment Law, working as a Lawyer at the Ministry of Labour, Welfare and Social Insurance of the Republic of Cyprus from 2015 to 2018. Subsequently, he joined the Employment team at George Z. Georgiou and Associates, where he maintains a strong presence in the field of Employment Law. Additionally, he is considered to be an accomplished employment law trainer and lecturer working at the University of Nicosia since 2019, where he teaches Employment Law to Law and Business Administration students. He is also the author of the 2019 book "The Employment Relationship and the Shareholder of Private Companies" published by Hippasus Publishing.

He has been a member of the Cyprus Bar Association and the Nicosia Bar Association since 2009 and is an active participant in the European Employment Lawyers Association (EELA). Since June 2023, he received the Cypriot seat on the EELA board, which he holds up to today.