Employee, worker, self-employed? Is employment status and 'Uber' problem for you. Our employment team looks at this hot topic.
Employment status and the gig economy are hot topics in employment law right now. It is estimated that around five million people in the UK work within the gig economy, and with cases against Uber and Deliveroo hitting the headlines, it’s unlikely that the issues surrounding this way of working are going to disappear.
Employment status is a complex legal area and, it is the status of gig economy workers which is the crux of the matter. There are three recognised categories of workers – employees, workers, and the self-employed – and each status has different employment rights attached to it.
Employees are afforded the most rights and protection, as detailed in employment law legislation. However, for employers who use a flexible work force, the issue is determining who is classed as a ‘worker’ and who is genuinely self-employed. ’Workers’ have a bundle of rights which are not enjoyed by those who are genuinely self-employed.
The biggest impact for employers with workers is on the holiday pay bill, which accounts for 28 days out of 260 working days, meaning employers are looking at a potential 10% increase on wage bills. But it’s not just holiday pay that makes this a potentially expensive issue; workers can fall within the auto-enrolment regime and are also entitled to the national minimum/living wage. Workers also benefit from the protection of discrimination and whistle-blowing legislation.
Although the difference in rights is clear, actually distinguishing between those who are workers and those who are genuinely self-employed is not clear-cut. Indeed, HMRC and employment tribunals approach the issue in different ways.
For the self-employed, having contractual documentation in place which shows the parties’ intentions is useful and almost certainly better than nothing. However, regardless of what it says on paper, the employment tribunal will look at what is happening in practice. For example, how much control do you have over what the individual is doing? How integrated are they in your business? Are they on the payroll? Can/do they send a substitute when they are unavailable? All of these factors can and do impact on employment status.
The Taylor Review into modern working practice has been published and has made various suggestions including rebranding workers as “dependent contractors”, treating workers as “employed” for the purposes of tax status, and allowing claimants to bring a claim to ET (without fee) to determine their employment status. We await to see how many of these will be implemented, but in the meantime if you have any questions please contact a member of the employment team.