Vicarious Liability and the Gig Economy: Why the Law Is Struggling to Keep Up

What Is the Gig Economy

The gig economy is a labour market built on temporary, flexible and task‑based work. Individuals are paid per job rather than through fixed salaries. In the UK, the number of gig‑economy workers grew from 4.7mn in 2019 to 7.25mn in 2022, with projections suggesting further growth. Roles range from taxi drivers and couriers to freelance professionals.

Flexibility is a key attraction. Workers can choose when to work and fit tasks around other commitments. However, gig‑economy roles typically lack job security and benefits such as paid leave. Workers may also feel less connected to organisations compared with traditional employees.

How Vicarious Liability Works

Vicarious liability allows an employer to be held liable for torts committed by an employee acting in the course of employment. The doctrine is grounded in enterprise risk: organisations that benefit from an activity should bear the losses arising from it.

Historically, vicarious liability applied only to employer‑employee relationships. Since Various Claimants v Catholic Child Welfare Society [2013], courts have extended the doctrine to relationships “akin to employment”. This includes volunteers and, as confirmed in Trustees of the Barry Congregation of Jehovah’s Witnesses v BXB [2023], unpaid officials with organisational responsibilities.

Independent contractors have traditionally fallen outside the doctrine. Employers are assumed to exercise less control over contractors, and contractors may delegate work to third parties. These features have supported the long‑standing rule that employers are not vicariously liable for contractors’ torts.

Is the Law in Need of Reform

In BXB, Lord Burrows reaffirmed that vicarious liability does not apply where the tortfeasor is a true independent contractor. He also set out factors for determining whether a relationship is “akin to employment”, including:

• Whether the work is paid for
• How integral the work is to the organisation
• The extent of control exercised
• Whether the work furthers the organisation’s aims
• How appointment and termination operate
• Whether the role fits within a hierarchy

These criteria highlight tension between traditional contractor classifications and modern gig‑economy roles. Many gig‑economy workers meet several of the factors associated with relationships “akin to employment”. For example, drivers working through digital platforms may be paid directly, perform work essential to the organisation and operate within systems that regulate conduct.

Case law shows that not all contractors would meet the test. In Barclays Bank plc v Various Claimants [2020], the doctor involved was not integral to the bank’s business and operated independently. However, the expansion of vicarious liability to “akin to employment” relationships suggests that some gig‑economy arrangements may warrant closer scrutiny.

Implications

Courts are cautious about extending liability to employers for contractors’ torts. Confidence in hiring contractors is important for business operations, and broadening liability could affect economic activity. Policy considerations therefore play a significant role.

At the same time, modern working patterns blur the line between employees and contractors. A case‑by‑case approach may better reflect enterprise risk, ensuring liability aligns with the realities of contemporary labour markets.