Worker or Self-Employed Decision
Today, the BBC are reporting that Uber, the taxi firm has lost an appeal against a ruling that its drivers should be classed as workers rather than self-employed.
Last October, an employment tribunal (Aslam and others v Uber BV and others) ruled that drivers were working for Uber and were entitled to workers benefits such as the minimum wage, rest breaks and holiday pay. They were not self-employed. The content of our previous post is reproduced below.
Are you self-employed? Or maybe you are an employee? Or a worker? Recent legal decisions provide clarity.
Pimlico Plumbers Ltd
The Court of Appeal made a high-profile decision in a case about situations where individuals thought to be self-employed were in fact workers. The case (Pimlico Plumbers Ltd and another v Smith) showed how Smith, one of its plumbers, had to wear a uniform, use a leased van with the company logo and tools, and worked a minimum number of hours. The court looked at the whole arrangement and decided that Smith was ‘an integral part of ..the operations and subordinate’. Smith was under an obligation to provide his services personally and could not send a substitute. Therefore as a worker he was entitled to basic employment rights.
What differences does employment status make?
Worker or Self-Employed?
Employment status defines the obligations of the organisation and the individual. It clarifies benefits and tax and National Insurance. The essentials of the relationship. An employee will work with a contract of employment that specifies pay, holiday, hours of work. A range of employment rights apply including a written contract, pay slip, maternity and sick pay for example.
A self-employed individual will usually be contracted for a particular task or service. These are individuals with particular skills and knowledge. Income tax and National Insurance contributions (NI) are the responsibility of the individual. Rights such as the national minimum wage are inapplicable.
The Employment Status Indicator provided by HM Revenue & Customs provides guidance on whether an individual is self-employed or an employee.
The Flexible Firm model provided by Atkinson back in the 1980s showed how organisations could be represented as a doughnut with a core of workers surrounded by a ring of agency workers, self-employed and sub-contractors. The recent legal decisions have been clarifying the employment rights of the periphery. Workers will include people in the Flexible Firm’s periphery, of casual, free-lancers, agency and seasonal workers.
From Doughnuts to the Gig Economy
In the 2010s there is now the “Gig Economy” that includes those people in the older model’s periphery. The gig economy is about a labour market where jobs are carried out by free-lancers, short-term contracts. Examples are couriers and drivers hailed by app. The gig economy describes individuals being paid for individual ‘gigs’. It is said to provide the benefits of individuals controlling when they work, their work/life balance. Individuals may be seen as ‘micro entrepreneurs’.
These decisions are a reminder to employers to be clear about employment status.