Employment status update
26 / 10 / 2017
2017 has seen a surge in cases being brought by individuals working in the “gig economy” claiming that they are workers and not self-employed. In March, we reported on the cases of Uber, City Sprint and Pimlico Plumbers (please click here to read the article). Since then, further cases have been heard in the Employment Tribunal.
The Tribunal has continued to decide in favour of the claimants, holding that they are workers and entitled to the associated rights, including the right to receive holiday pay and the national minimum wage.
Although all of the cases are fact specific, the Tribunal followed the same approach as in the earlier cases: it looked beyond the contractual documentation to the reality of the situation. The claimants succeeded due to the evidence indicating the extent of the company’s control and requirement for personal service.
In Boxer v Excel Group, the Tribunal found that the company exerted control over Mr Boxer’s working practices by requiring him to be available at all times during the working day and preventing him from taking time off or changing his hours unless it had been agreed in advance. The company set the terms with customers and the rates of pay. Although his contract allowed him to use a substitute, this was not possible in practice.
In Gascoigne v Addison Lee Ltd (also involving a cycle courier), it was found that Addison Lee set rates of pay and managed all payments. Couriers were given Addison Lee-branded bags and T-shirts, responded to a central controller and used Addison Lee IT devices.
In the latest case, Lange and others v Addison Lee Ltd, the tribunal found that the company required the drivers to perform the work personally whenever they were “logged on” and exerted control over their working practices.
The government is also putting the gig economy under scrutiny. The Office of Tax Simplification (‘OTS’) has recently analysed the tax issues involved. UK tax law does not recognise ‘worker’ status, only “employed” and “self-employed”. The self-employed pay lower National Insurance Contributions (‘NICs’), no employer NICs apply to their earnings and they fall outside PAYE. However, workers who have not obtained self-employed clearance from HMRC must be treated for tax purposes almost identically to employees. The OTS has called for employee NICs to be equalised and suggested that tax could be withheld from the hiring fee for ‘gig’ services to incentivise payment of PAYE and NICs.
In addition, the Taylor Review has called for a new category of worker – “dependent contractor” – for those who are eligible for worker rights but not employees.
Whether the government will adopt these suggestions is unclear.
What is evident is that the courts are continuing to apply a critical eye towards non-traditional employment and business models and that the room for manoeuvre for companies who are operating under such models is narrowing further.