When in August 2015 Michael Lane was made redundant from his job testing computer software, he needed to find work. A keen cyclist, Lane had noted the rapid rise in the number of bike couriers on the roads near his home in south London. Many of these riders wore the uniforms of app-based food delivery companies that enable customers to order burgers and pad thais using their smartphones.

Lane, whose curly, shoulder-length hair is pulled away from his eyes with an elastic band and whose earlobes are stretched by black plugs, was tempted by the chance to escape office life. So in November that year he signed up as a courier for Take Eat Easy, a Belgian-owned food delivery start-up. There was no interview or assessment of Lane’s cycling ability. “I remember in our ‘onboarding’, one applicant was late because they couldn’t find the building. It amused me to think that this wasn’t a big negative when being offered a job delivering things around London,” Lane tells me over a cup of black coffee at a branch of Leon, the chain where he often used to pick up super-food salads to despatch to customers.

In June last year, eight months in to his new life as a cycle courier, Lane also began to work for UberEats, part of the American car-hailing company Uber. He was lured by its higher rates – and it was just as well. Within weeks, Take Eat Easy ran out of money and ceased trading. A blog post by the company’s co-founder Adrien Roose marked the closure: “On-demand delivery is dead. Long live on-demand delivery.”

The offer from UberEats proved too good to be true, Lane says. At the start, it was offering up to £20 an hour for deliveries. Then the company changed its payment structure so that riders received a fee per delivery, and his hourly earnings fell substantially as a result. Lane now sees the early lucrative shifts as a cynical attempt by UberEats to lure couriers away from the competition.

“They wanted to destroy Deliveroo,” he says, speaking softly with a Shropshire accent, referring to the fast-growing British food delivery firm.

UberEats says that the incentives were meant to be only temporary and were communicated as such. The company insists that its couriers still make between £9 and £10 an hour on average. But the couriers and logistics branch of the Independent Workers Union of Great Britain says the hourly rate falls by at least £2 once insurance, cycle repairs and all-weather clothing are factored in.

It was not just the reduction in wages that angered Lane. He was dismayed by UberEats’s lack of support for its couriers when, for instance, there was a problem with an order: “There is a call-centre number . . . but all they will do is tell you to keep calling the customer and wait 15 minutes before cancelling the delivery.” Moreover, he says, the company would deactivate couriers’ accounts, stopping their work, “without warning or reason”. (The response from UberEats is: “We take any decision to deactivate a courier very seriously and this is always done as a last resort following a breach of our partner terms. Courier partners are always made aware of this decision.”)

Lane, who is 28 and single, and has no children, knows that he is better off than his co-workers with dependants. “I don’t know how people manage with children on this wage,” he says. Nonetheless, he has had to reduce his expenditure, budgeting carefully for everything. “I drastically cut down on social activities so most of my money goes on food shopping and bills.”

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Michael Lane’s move into the food delivery business was a dispiriting introduction to the “gig economy”, the term used to describe a workplace dominated by digital labour platforms such as Uber, Deliveroo, Freelancer, Fiverr and TaskRabbit, on which independent workers are matched with jobs – or rather, tasks and gigs: everything from deliveries to cleaning and graphic design work. For the workers, the flexibility and the lack of barriers to entry are appealing. They can just log on to an app on their phone and start working.

Estimates of the number of “gig workers” vary. The term has been used to describe everyone from a freelance consultant to a person letting out a room on Airbnb. Recent research by McKinsey Global Institute found that 20 to 30 per cent of the working-age population in the United States and the European Union, or up to 162 million people, engage in independent work. If you look solely at those using on-demand, online work platforms for paid gigs, it is far smaller – just 6 per cent of the independent workers surveyed. However, the report said, this is a trend that cannot be ignored.

“Digital platforms are transforming independent work, building on the ubiquity of mobile devices, the enormous pools of workers and customers they can reach, and the ability to harness rich real-time information to make more efficient matches,” the report said.

But is it a positive trend? Some argue that the platforms liberate those who use them, giving them an opportunity to be their own boss. Others criticise the digital companies for making work more precarious and for mislabelling workers as self-employed – thereby shirking their duty to pay tax, decent wages and benefits.

If Lane was sick or if he got knocked off his bike, for instance, he would receive no compensation for time away from work. UberEats (like the Uber car service) is attractive to workers, he says, because they can start work at any time. “But you would make virtually no money unless you worked peak hours at lunchtime and evening.”

Some claim that the much-vaunted flexibility of the gig economy isn’t always what it seems. When my colleague Izabella Kaminska tried working as a Deliveroo courier, she found that workers were expected to work mandatory shifts and could not opt out without a penalty. She was also told she would need to give notice if she was on holiday and expecting to skip the shifts. (Deliveroo maintains that the work is flexible.)

As Hillary Clinton put it in 2015: “This on-demand or so-called gig economy is creating exciting economies and unleashing innovation. But it is also raising hard questions about workplace protections and what a good job will look like in the future.”

In October, Theresa May ordered a review of workers’ rights in Britain’s gig economy, saying she wanted to be “certain that employment regulation and practices are keeping pace with the changing world of work”. Matthew Taylor, the chief executive of the Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA) and former chief of policy to Tony Blair, has been given the job of leading the review.

Taylor is wary of the doom-mongers talking down the gig economy’s strengths, which he says are a high participation rate and flexibility. The growth in self-employment, he told me, is driven not only by employers imposing new work arrangements but also by workers seeking autonomy and a good work-life balance.

“What we want is a labour market which is productive and suits employees and employers,” Taylor argues. It’s a complex issue: “Some people like piecework. You can decide on the intensity of your work. What doesn’t work is if you can’t earn the minimum wage. You don’t want to incentivise behaviours that are not economically productive or fair to workers: we don’t want to reduce innovation and flexibility.”

Yet, for all the attention the gig economy has received, some argue that the only thing new is the name. Hannah Reed, the Trades Union Congress senior policy officer for employment rights, says: “These casual working terms are an extension of old practices, just accelerated by technology.”

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The company that is the lightning rod – or poster child, depending on your point of view – for the on-demand economy is Uber. The ride-hailing app, which was launched seven years ago in California, is privately owned and was recently valued at $68.5bn. Since 2009 it has established operations in almost 550 cities worldwide, disrupting the taxi business and attracting sharp criticism and protests from established cab drivers, who complain that Uber is pushing down fares while avoiding costly taxes and regulations.

Last month Travis Kalanick, its chief executive, apologised after he was filmed arguing with an Uber driver who complained about his earnings. “You know what, some people don’t like to take responsibility for their own shit,” Kalanick told the driver. “They blame everything in their life on somebody else. Good luck!”

Uber has also drawn protests, including court action, from its drivers. In October, an employment tribunal in London found that its drivers were “workers” and had been mislabelled as self-employed; consequently, the drivers were entitled to rights including the minimum wage and paid holiday. The tribunal ruling said that Uber had been “resorting in its documentation to fictions, twisted language and even brand new terminology”. “The notion that Uber in London is a mosaic of 30,000 small businesses linked by a common ‘platform’ is to our mind faintly ridiculous,” the judges said.

This dispute was one of a number of tussles around the world between Uber and various courts and regulators, trying to determine whether drivers for the firm were employed or self-employed. In the UK, employment law offers another category: that of “worker”, the one in which the tribunal placed Uber drivers. Workers enjoy some employment rights, such as holiday pay, and the right to receive the minimum wage, but lack others, such as the right to claim unfair dismissal and redundancy settlements.

Annie Powell, an employment solicitor at the specialist law firm Leigh Day, who worked on behalf of the GMB trade union on the case, says that Uber is one of many firms operating in the gig economy that are not complying with the law. “Lots of companies appear to be mislabelling their staff as self-employed and denying them their rights,” she told me.

The tribunal decision has emboldened others, including Deliveroo riders, to mount legal challenges to their status as ­independent contractors.

Uber said it will appeal the UK employment tribunal ruling, asserting that its drivers should not be classed as self-employed. Jo Bertram, the company’s regional general manager in the UK, says: “Tens of thousands of people in London drive with Uber precisely because they want to be self-employed and their own boss. The overwhelming majority of drivers who use the Uber app want to keep the freedom and flexibility of being able to drive when and where they want.”

Before the ruling, Uber published its own survey, together with the market research firm ORB International, based on interviews with 1,000 licensed private hire drivers across the UK who use the Uber app. More than three-quarters of the drivers said that being self-employed and able to choose their own hours was preferable to having the perks of employment, such as holiday pay. According to the survey, 94 per cent of drivers said they “joined Uber because I wanted to be my own boss and choose my own hours”. Just 6 per cent said they joined “because I couldn’t find other work”.

Steve Rowe, a 66-year-old part-time Uber driver in London, is concerned about the implications of the employment tribunal ruling. “I was dumbfounded by the case,” he says. “Self-employment has been normal for private hire firms. Minicab companies put customers in touch with drivers, just the same as Uber.”

Having been a self-employed businessman for decades, Rowe took time out of the workforce to look after his three children after his wife’s death. Today he drives for Uber part-time while juggling various creative projects. His fear is that the ruling will force the tech firm to put its prices up, which, in turn, will reduce demand.

But Asif Hanif, 45, an Uber driver who is a GMB member, welcomed the ruling, which he sees as important not just for his peers at the ride-hailing app, but for the broader gig economy, too. “Why should we have to turn to tax credits when a company is abusing the workforce?”

As in the food delivery business, the drivers and the tech firms that pay them disagree on how much they earn. Hanif says that drivers can earn less than the minimum wage, once Uber has taken its commission and he has paid for his car insurance, fuel and other running expenses.

Uber insists that the average payment is £16 an hour after its service fee. Maria Ludkin, a GMB legal director, says this “does not represent the position for the hundreds of drivers we represent”. Hanif, who has two young children and is on tax credits, says the

temptation for drivers is to work long hours. This is risky behaviour for drivers and passengers – and it puts workers in a bubble, “cut off from their families and society”.

The Uber decision has also highlighted the vexed issue of how to define self-employment. Citizens Advice, the charity that advocates on welfare and consumer matters, has produced research indicating that up to 460,000 people could be falsely classified as self-employed when their status should be that of employee or worker. And as such, the government is missing out on tax and employer national insurance contributions. The discrepancy was addressed in the spring Budget in the Chancellor’s proposed increases to National Insurance contributions for the self-employed. Philip Hammond subsequently dropped the plans following an outcry from Conservative MPs.

Matthew Taylor of the RSA says that probing employment status, particularly at a time of austerity, is important because of the cost to the public purse. “If an average worker moves from being employed to self-employed, doing the same work on the same remuneration, it costs the Exchequer up to £3,000 a year in lost revenue.”

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While aspects of the gig economy can be traced to the past, one that is new is the clever technology. Consumer gratification can be met instantly by workers with smartphones: downloading an app, as Michael Lane discovered, was all it took to start work. Yet he also found the tech that matches couriers with hungry customers and sets the rate and routes, in effect replacing the old radio-controller role, to be alienating. It meant that he rarely met or spoke to colleagues. There was no staff room in which to let off steam or chat about the spring sunshine, no ongoing relationship with a line manager.

“In a normal courier company . . . people both love and hate their controllers,” he said, and either way there was at least a “human connection”. If the tech went wrong, there was nowhere to vent, he says. Couriers just had to deal with it.

As Julian Sayarer, a former bike courier whose book, Messengers, recounts his experiences in the industry, says: “Where once ‘sacking’ a worker was a very loaded move, the new, clinical ‘deactivation’ seems quite clear evidence of the perils of app-based employment without any human ties.”

Amy Wrzesniewski, a professor of organ­isational behaviour at the Yale School of Management, says that gig workers are more susceptible to anxiety than employees. “Organisations are a good home base for parking people’s anxiety,” she says. “Membership of an organisation tethers people.” She worries that, with faceless technology, “workers divest from the relational investment” and are cast adrift.

Cathy O’Neil, the author of Weapons of Math Destruction: How Big Data Increases Inequality and Threatens Democracy, believes that tech brings both advantages and disadvantages for workers. “It can be clarifying if it’s fair and consistent. Or it could be a way of distancing responsibility.” Algorithms, she notes, can be like the hand of God. “It’s a tool of power. They are built to optimise results for the company . . . If they cause suffering for the workers, they are often ignored. The mistakes that get corrected are the ones that cost the company.”

In August, after two months of working for UberEats, Lane left – though leaving just involves not logging on to the app. He moved to become a courier at Gophr, an on-demand delivery service aimed at business clients that allows cyclists, motorcyclists and van drivers to log in for work over their smartphone. Though the app is similar to UberEats and Take Eat Easy, Lane was heartened by the company’s responsiveness to couriers’ concerns and problems.

Seb Robert, Gophr’s founder, says that it has been his ambition to do right by couriers “in what we viewed as a very exploitative industry”. This is a noble aim, but the company has not met its goal of paying its couriers the London Living Wage of £9.75 an hour. The problem, Robert says, is that the industry is fiercely competitive – and most customers are unconcerned about the couriers’ wages. “Their primary motivation when finding a courier service is getting the cheapest price. They tend not to think too much about the quality of the service, much less the couriers’ quality of life.”

So, though in many ways this is a great time to be a consumer, with access to cheap on-demand services, it may not be so great for the people doing the work. Asif Hanif, the Uber driver, thinks that consumers’ expectations are too high; cab journeys, which were once a luxury, are now cheap.

Robert said that Gophr called nearly 700 companies that were London Living Wage-accredited to find out if they would like to use a courier service that paid fair rates to its delivery workers. A handful of firms signed up, including one large corporation that had made the Living Wage a priority for 2016. It requested one job a day so that it could fulfil the Living Wage requirements. Five months later, it stopped using Gophr’s services. “We’re not that expensive in general, but would certainly come out more expensive for companies who do hundreds of jobs a day,” Robert says.

Jason Moyer-Lee, the general secretary of the Independent Workers Union of Great Britain, believes that companies can be persuaded to pay a bit more. “My experience has been that when it is put to customers that they are complicit in exploitative labour practices, they often do care.”

Even if that ever happens on a large scale, it is unlikely to occur overnight. And the likes of Lane cannot afford to wait. When I caught up with him again in January, I discovered he had moved to a courier company that pays a daily rather than a piece or hourly rate, because he could not bear the anxiety over the fluctuations in his earnings. He does not think the work will be sustainable unless the law changes soon in favour of gig economy workers, leading to better wages and holiday pay. “If I end up sick or injured I have no protection,” he says. “I wouldn’t be able to afford to live.”

Emma Jacobs is a features writer for the Financial Times