You will have been hard pressed to miss the recent publicity surrounding the “gig economy” and various claims being brought before the Employment Tribunal concerning employment status.
In October 2016, Uber drivers in the UK won the right to be classed as workers rather than self-employed. Furthermore, in January 2017, an Employment Tribunal found that Maggie Dewhurst, a courier with logistics firm City Sprint, should be classed as a worker rather than self-employed, entitling her to basic employment rights such as holiday pay, paid rest breaks and the national minimum wage.
Pimlico Plumbers case
In the recent case of Pimlico Plumbers Ltd and anor v Smith, the Court of Appeal has upheld the decision of an Employment Tribunal that a plumber (Mr Smith) who was self-employed for tax purposes was nevertheless a ‘worker’ under the meaning of the Employment Rights Act 1996 (ERA 1996).
Mr Smith had initially brought claims of unfair dismissal and wrongful dismissal before the Employment Tribunal; however, the Tribunal ruled that he was not an employee under the ERA 1996. However, Mr Smith had also claimed for unpaid holiday pay and unlawful deductions from wages – for which he only needed to prove he was a worker, not an employee. The ERA 1996 describes a worker as someone who works under a contract of employment or:
“Any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual”.
The factors which were relevant in the case of Mr Smith were his personal performance of the work alongside the fact Mr Smith was in business on his own account and he did not have an unfettered right to provide a substitute.
It is important to highlight that Mr Smith attempted to argue that he was an employee before an Employment Tribunal. This argument was rejected by the Employment Tribunal and Employment Appeals Tribunal.
The Pimlico case does not change the current law regarding employment status, but again highlights the emergence of the “gig economy” and the difficulties associated with this business model. When considering employment status, it is necessary to take account of all factors and not simply rely on one factor over another. It is important to note that all employees are workers, but not all workers are employees – the threshold required for worker status is lower than that of an employee. Although the Pimlico case does not amend current law, it is helpful to review what factors should be considered when trying to establish employee or worker status:
- Personal Service – Does an agreement exist to provide the servant’s own work or skill in the performance of service for the master in return for a wage or remuneration?
- Control – Is there control of the servant by the master?
- Mutuality of Obligation – Is there an obligation on the employer to provide work and an obligation on the individual to accept that work?
- Other factors – Considerations such as who provides the tools for the work, who deals with tax, who bears the financial risk, is the individual integrated into the company etc.
An Employment Tribunal will consider what actually happened in reality between the parties as a factor. For example, if the individual is described as a self-employed contractor, but the business has complete control over the work undertaken, supplies all tools, expects personal service and integrates the individual into the business, then a Tribunal may well discard the description applied by the parties to the relationship.
It is clear that employment status is becoming a contentious area, especially for those businesses who offer short term contracts or freelance work, such as Uber and Deliveroo. If you would like further advice on this topic, please get in contact with me.