Determining employment status and employee rights
22 February 2017
In today’s economy, many of the old distinctions between employment and self-employment have become blurred and some employers and employees are seeking to take advantage of the differing tax regimes and rights that attach to the different statuses.
“The nature of the way people work has changed with a move away for many from the traditional model of long-term, full-time employment in a single job to a more flexible model and the rise of ‘gig economy’”, says Sarah.
Recent cases in the employment tribunal on the issue of employment status have included Aslam and others v Uber BV and others, the ‘Uber Case’, which found that the taxi drivers were workers and not self-employed. Dewhurst v CitySprint UK Ltd also found that a cycle courier was also a worker while logged into the Citytrakker system.
Even more recently, the case of Pimlico Plumbers and Charlie Mullins v Gary Smith which was heard by the Court of Appeal, found that Gary Smith was a worker and not self employed even though he had been self employed for tax purposes for a considerable time. Factors that counted towards his having the status of a worker rather than of being self-employed included:
- directions as to a minimum number working hours;
- he was required to wear a uniform;
- he was required to use one of the Pimlico Plumbers vans for work;
- he could only swap jobs with other Pimlico Plumbers operatives; and
- Pimlico Plumbers restricted his ability to work for himself or other companies.
With a finding of ‘worker’ status, Mr Smith did not have rights to claim for unfair dismissal or wrongful dismissal but had the required status to claim unpaid holiday pay and unlawful deductions from wages.
Each of these cases show that if employment status is looked at by a Tribunal or Court, there will be close attention to the facts and the true relationship between the parties which is not always the same as the contractual documents.
In the Uber, case the judgment records that ‘Any organisation that … resorting in its documentation to fictions, twisted language and even brand new terminology, merits, we think, a degree of scepticism.’
There are wider issues at stake here too beyond the possibility of potential claims for holiday pay and unfair dismissal and the issue is clearly on the government’s radar.
The Department of Business, Innovation and Skills published its Employment Status Review on 9 February 2017, which recognised the current uncertainty and proposed a number of possible reforms ranging from a presumption of employment status and automatic eligibility to full employment rights unless an alternative status was proved, to better education and support to allow individuals to understand and claim their rights.
The false or incorrect adoption of self-employment status and other forms of insecure work also has financial costs to society and it has been estimated by the TUC that the costs to the economy could be as high as £4 billion a year from lower taxation and reduced incomes.
There is due to be an appeal on the Uber case, but this will not be the end of the employment status issue. It is likely that the employment relationships will come under increasing scrutiny and action may indeed be taken by the government to try to address abuse.
In the meantime, employers and employees would be advised to review their arrangements and adopt documentation that reflects them. As can be seen from the comment in the Uber case, no amount of fancy drafting will avoid a finding of employment or worker status if that is what the facts indicate.
The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.