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Home » Latest News » Worker versus Self-employed - what’s in a name?

Worker versus Self-employed - what’s in a name?

Worker versus Self-employed - what’s in a name?

There have been a number of high profile cases in recent months about employment status in the so-called ‘gig’ economy. This is a term which has no legal definition but applies to situations such as odd-jobbing or freelancing.

Uber, the transportation business, is facing a number of claims from current or former drivers for minimum wage and holiday pay. Similar claims have succeeded against Pimlico Plumbers, Citysprint and other courier companies.

These are claims which require the individuals to establish that they are “workers.” However, Uber and the other businesses involved in these cases argued that the individuals were all self-employed and running their own businesses.

In employment law, workers are a category of individuals who have some legal rights – but not the full range of rights that traditional employees have. For example, workers cannot claim they have been unfairly dismissed but they do have rights under discrimination, minimum wage and working time legislation. Self-employed individuals have, of course, no employment rights.

What generally distinguishes a worker from an employee is that a worker may be engaged under a more casual arrangement. They may have no right to be offered any work and there may be an option to turn down work when offered. However, a worker is obliged (when they do accept work) to carry the work out personally i.e. unlike someone who is truly self-employed they cannot send a colleague or an employee of their own. There is often also an element of control by the hiring business over the worker. This element of control is usually lacking where the individual is self-employed.

In these cases the label applied by the parties and the paperwork which is in place is simply one factor to be considered – it is open to an Employment Tribunal to look at the reality of the relationship in practice. In the Uber cases, the company argued that they simply operated as a technology platform where – through their smartphone app – they merely provided “business opportunities” for the (allegedly self-employed) drivers by putting them in touch with potential passengers. The London Employment Tribunal disagreed and found that the drivers were workers at the times when they were available to take fares. There were various reasons for the decision on the facts of the case but a major issue was the extent of control which Uber exercised over the drivers, such as setting the journey and fare for them in advance.

There are significant risks for businesses in getting employment/ worker status wrong (the backdated claims for minimum wage and holiday pay will be significant in these cases). Further, there are serious tax implications if someone has been incorrectly treated as self-employed. There are also ‘brand’ issues as some seek to portray these situations as an attempt by large companies to exploit vulnerable workers.

There are expected to be numerous appeals by the companies in these cases. However, the cases do signal how difficult it is to establish a genuine case of self-employment where a business has a personal relationship with an individual who is providing services and any reasonable degree of control over their work. This is a general trend which has been developing over several years and the companies involved in these arrangements will, in our view, face an uphill battle to overturn the Tribunal’s decision.

For further information please contact Nicola Barrass on 01482 730339 or by email: nb@bmcf.co.uk, or your usual contact in the employment team.