Establishing the employment status of persons they have engaged has for long, been a tricky area for employers. Is the individual working in an employee capacity (and therefore, entitled to the full range of employment rights), as a worker (entitled to some, but not all employment rights) or are they self-employed?
There have been a number of cases relating to the ‘gig’ economy recently, that question whether individuals are employed as workers or whether they are self-employed.
The Government also launched a review of employment status in the ‘gig’ economy, which is due to be published at the end of May 2017. As part of the review, an employment status report was published on 9 February 2017, which recognised the difficulty businesses face when deciding on employment status and puts forward several suggested changes to the law. The suggestions range from presuming employee status, to publishing clearer guidance. The report claims however, that the options are ‘highly complicated’, so no changes to the law are expected any time soon.
What is the ‘gig’ economy?
The ‘gig’ economy includes the types of role where individuals work on a temporary basis and are paid per job or ‘gig’. A courier is a good example.
It is important to determine the status of all individuals working within your business in order to fully comply with the law. For example, a worker is entitled to the minimum wage, maximum working hours and rest breaks, paid annual leave, sick pay and some other procedural rights, such as a right to be accompanied at a disciplinary meeting, whereas self-employed individuals are not. If you have any doubts as to the status of any individuals working within your business, you can always Ask a Lawyer.
There are 3 recent key cases relating to this topic and all should be noted carefully, particularly if your business has been structured to engage a number of self-employed individuals, as you may find that they are not, in fact, self-employed.
Aslam and others v Uber BV
Key facts: Uber drivers claimed that although their contracts with Uber said otherwise, they were not self-employed, but workers for Uber. The reason was because they could not provide alternative drivers under their accounts and they had some protection when fares were not paid/their cars soiled by passengers. In October last year, the Employment Tribunal agreed that the drivers were indeed workers.
Impact: Uber have already announced that they will appeal this case, as it affects their contracts with 40,000 drivers, all of whom, are entitled to more employment protections than are currently being offered to them. The Employment Tribunal also stated that if the method of working was different, the decision may have been different, meaning this may cause more of an issue for businesses using online platforms. However, traditional businesses which have recently sought to reclassify their workforce as self-employed may also be affected.
Dewhurst v City Sprint UK Limited
Key facts: A CitySprint cycle courier claimed that she was a worker entitled to annual leave. Last month the Employment Tribunal ruled in her favour, due to: 1) the substitution clause being so narrow that realistically only a CitySprint colleague could be a substitute for the courier under the contract; 2) CitySprint tracking the courier and contacting them by radio throughout the day and telling them where to go; 3) CitySprint calculating and making payments to couriers automatically, without any reference to them; and 4) couriers wearing a CitySprint uniform. The Tribunal was particularly critical of the contract, which was entitled “Confirmation of Tender to Supply Courier Services to CitySprint Limited” – a title it said, looked like the work of “an army of lawyers”.
Impact: A business cannot hide behind the title of a contract, as it is the substance behind the employment relationship that matters. Again, there may or may not be any real impact on the ‘gig’ or wider economy, depending on whether the case is appealed and what is decided in any appeal of the case.
Pimlico Plumbers Ltd and another v Smith
Key facts: Mr Smith was described as self-employed in his contract with Pimlico Plumbers. He could choose which jobs he took on, worked with his own tools and dealt with his own tax. However, Mr Smith was required to wear Pimlico’s uniform, use a van leased from Pimlico containing a GPS tracker and work a minimum number of hours per week. There was no contractual term allowing Mr Smith to send a substitute to do the work and plumbers could swap jobs (although this was more like swapping shifts between workers rather than substitution). On termination, Mr Smith brought claims for unfair dismissal and disability discrimination. He was found not to be an employee and so could not bring an unfair dismissal claim, however, was found to be a worker and therefore, able to bring a disability discrimination claim.
Impact: This month’s Court of Appeal decision in the Pimlico Plumbers case is, binding on other courts and tribunals, and so is likely to be a key authority in respect of employment status in ‘gig’ economy cases, going forward. The most important factor considered in this case was personal service. The Court specifically set out the principles of personal service – a critical factor when determining employment status and this should now be considered by any employer unsure about the status of an individual working for it.
None of these cases found the individuals to be employees, but workers. This meant that they did not qualify for the full range of rights and protections that employees are entitled to. Secondly, these decisions are likely to be appealed and there are a number of other outstanding legal challenges with courier companies including Hermes, Addison Lee, Excel and eCourier, so no definite conclusions about employment status in the ‘gig’ economy can be drawn at this stage. Once the above cases come to a final conclusion and the full review of employment status in the ‘gig economy is published (likely to be at the end of May 2017), businesses should be clearer on how to determine employment status. In the meantime, if you have any doubts about employment status, Ask a Lawyer.