Employment Law Inverness – Macleod & MacCallum

Employment Status Update

Background

The issue of employment status continues to be toward the top of the Government’s agenda, and this at a time where we are not short of political news stories! This concern is clear from the fact that two separate inquiries, “the future world of work” and The Taylor Review, have recently been established. Alongside this there have been a series of recent cases, two of the most high profile being the “Pimlico Plumbers” and “Uber” decisions.

The main reason this issue has been gathering so much political momentum is because the question of employment status determines an individual’s employment rights.

-Employees are entitled to much more employment protection than workers, or self-employed contractors. This includes the right to; claim unfair dismissal, redundancy payments and maternity/paternity leave and pay.

-Workers employment rights, on the other hand, are largely limited to; national minimum wage, holiday and discrimination protection.

-Self-employed contractors receive very little employment protection, beyond basic health and safety and anti-discrimination rights.

Pimlico and Uber Decisions

The question of employment status is not a new one for Courts and Tribunals. However, the modern “gig economy” and arguably sharper employer practices, has increased the volume of such claims. A largely traditional approach was therefore taken in the case of Pimlico Plumbers Ltd & Mullins V Smith, with the Court of Appeal focusing on; the limited right to substitute/personal service requirement and integration into the business. In regard to integration, of crucial significance was the fact that Mr Smith required to use a branded uniform/van and work a minimum 40 hour week.

Taking all the facts together, and although Mr Smith had some flexibility over the hours he worked and was treated as self-employed for tax and VAT purposes, it was held he should properly be considered a worker. This decision demonstrates that factors such as, personal service and integration into the business, will still play a crucial role in the analysis. This was in spite of the fact that Mr Smith was well paid for the work he did and obtained a tax benefit from the arrangement being described as ‘self-employed’.

It has become increasingly clear, particularly in other recent cases including Aslam and Others V Uber BV and Others (currently being appealed to the Employment Appeal Tribunal), that Tribunals are showing a willingness to look beyond contractual arrangements to the reality of the situation.

In this case, Uber sought to defend their position by arguing they were simply a “technology app” and that drivers used their own cars to work flexibly, as they wished. However, the Tribunal was critical of this and observed that drivers could not (for example) negotiate with passengers and they were offered/accepted trips strictly on Uber’s terms. It was therefore found that a large degree of “control” was exercised by Uber (including punitive performance criteria) and therefore a lack of autonomy associated with genuinely self-employed individuals.

What are the Implications?

With the so called gig economy on the increase it is little wonder that political momentum has gathered around this issue. There is, needless to say, a clear issue here in terms of the very limited legal protection afforded to self-employed individuals, when compared to workers/employees. Additionally, there is also the small matter of potentially millions of pounds of unpaid tax and national insurance contributions being lost to the exchequer!

It is also clear, particularly from the quite distinctive facts identified in the above two cases, that this question could potentially cut across a whole range of sectors. Trades (such as plumbing), courier services and technology/transport apps have been the focus of scrutiny in Tribunals to date. However, there would seem no reason why such challenges could not be made in respect of; self-employed (or “zero-hours”) arrangements within the; tourism, hospitality, leisure and retail sectors. Zero-hours arrangements tending also to confer worker status, at the least, but with businesses sometimes unaware of this.

The impact of the decisions to date, and the ongoing reviews, may therefore soon be felt right here in the Highlands. It is therefore important that businesses are pro-active and start to assess their self-employed/zero-hours arrangements, to determine what exposure there may be. If businesses are unsure of whether any of their arrangements confer worker (or employee status) and what the implications of this may be, please feel free to contact us.

MacLeod & MacCallum’s Employment Law, Inverness Team, Euan Smith and Graham Laughton, act for both businesses and individuals and can be contacted on 01463239393 or employment@macandmac.co.uk

May 11, 2017