Why does status matter?
Many so called “gig economy” companies seek to avoid employment protection rights by engaging those who work for them as self-employed contractors. As a consequence of being self-employed, the individuals have no employment rights such as unfair dismissal protection, no entitlement to receive the national minimum wage and no entitlement to paid holidays.
There have been a series of cases reported recently commencing with the Uber Tribunal decision, followed by Deliveroo Bike Courier Tribunal and more recently the case of Pimlico Plumbers and Charlie Mullens v. Garry Smith EWCA CIV 51 in terms of which the Courts and Tribunals have analysed whether or not somebody is truly self-employed or in actual fact a worker or employee for the purposes of employment rights.
Getting employment status right for your business will have a material bearing on your financial wellbeing!
What is a worker?
A worker is neither an employee or self-employed. A worker is someone who performs work or services personally for another. Workers are entitled to be paid holidays and national minimum wage.
What this trio of cases underline is that simply asserting in the contractual documentation that somebody is self-employed does not mean that as matter of law and fact they actually are. Tribunals will consider what the practical reality actually is and self-employment status will not be attained simply through contractual documentation alone.
What did the Courts/Tribunal consider significant?
In the Pimlico case above, the Court put a spotlight on a business model under which operatives are intended to appear to clients of the business as working for the business but at the same time the business itself seeks to maintain that, there is a legal relationship of independent contractor rather than “employer” and “employee” or “worker”.
The Court provided a useful summary of the principles which are applicable to determining whether or not somebody is self-employed, a worker or an employee. In particular, it focused on whether or not there was a requirement for personal performance by the individual. If there was a requirement for personal performance then it was more likely that the individual would be an employee or a worker.
Additional factors considered of significance in the Uber and Deliveroo cases were that the individual could not determine how jobs were performed; could not pick and choose the jobs carried out when working; could not accept or undertake work for others; and had restrictions on appointing a substitute in respect of non-availability.
The greater the degree of control and insistence on personal performance the greater the prospect of employment or worker status.
Whilst these cases have concerned the so called “gig economy” they do, of course, have implications for employers in for example, medical general practice and dental sectors who employ professionals such as GPs and Dentists on a self-employed basis.
It is worth undertaking a risk assessment of the contracts of appointment of professionals in these sectors to identify whether they are genuinely self-employed contractors or are at risk of being found to be employees or workers.
If you would like any further information or assistance regarding these developments then please contact the Davidson Chalmers Employment Team who will be happy to provide their expertise and advice.
The matter in this publication is based on our current understanding of the law. The information provides only an overview of the law in force at the date hereof and has been produced for general information purposes only. Professional advice should always be sought before taking any action in reliance of the information. Accordingly, Davidson Chalmers LLP does not take any responsibility for losses incurred by any person through acting or failing to act on the basis of anything contained in this publication.