As the “gig” economy continues to grow, a hot topic for businesses that engage casual workers is whether those they engage on a self-employed basis are in fact workers. It is an important (and potentially expensive) distinction, bearing in mind that workers get increased rights and protections at work such as:
- The national minimum wage.
- Paid holiday.
- Rest periods and other limits on working time.
- The right to seek compulsory trade union recognition.
- The right not to suffer detriment under the whistleblowing provisions of ERA 1996.
Following successful claims in the Uber and Citysprint cases by individuals asserting that they are workers not self-employed, earlier this summer the Supreme Court handed down its long-anticipated judgment in Pimlico Plumbers Ltd and Mullins v Smith. In this case, a former Pimlico Plumber also succeeded in persuading the Supreme Court that he too was a worker, upholding the judgments of the Employment T, the Employment Appeal Tribunal and the Court of Appeal.
Although Mr Smith’s contract stated that he was an independent contractor, was VAT-registered and paid self-employed tax, the court determined that the dominant feature of Mr Smith’s contract was that he should perform the work himself, with only a very limited right to provide a substitute. It was also clear from the tight controls to which Mr Smith was subject (Pimlico Plumbers controlled his uniform and his administrative duties, as well as when and how much payment he received) that Pimlico Plumbers was not just a client of Mr Smith. Essentially, Mr Smith was an integral part of Pimlico Plumbers’ operations and subordinate to Pimlico Plumbers.
In this case it was found that the facts surrounding the relationship prevailed over the written terms. However, this may not always be the case as each employment status case will be decided on its facts and employers all have different ways of operating, different contracts and make different demands on those they engage. That said, these cases emphasise the importance of ensuring the contractual documentation reflects the reality of the working relationship, with a view to ensuring there is no ambiguity over the status of the person engaged.
The next high profile employment status case on the horizon is Uber’s appeal against the Employment Tribunal and Employment Appeal Tribunal’s ruling that Uber drivers are workers (Uber BV v Aslam), which is due to be heard at the Court of Appeal on 30 October 2018. However, like the Pimlico Plumbers case, this judgment is likely to be largely limited to its facts, so anticipated clarification from the Government on this issue is still very much on the cards. The Labour party has just announced that they would extend the rights given to gig economy workers to be similar to those in permanent work, so we will see if the government also takes this direction.
The contents of this update are intended as guidance for readers. It can be no substitute for specific advice. Consequently we cannot accept responsibility for this information, errors or matters affected by subsequent changes in the law, or the content of any website referred to in this update. © Mundays LLP 2018.