Well for starters we are not talking about Facebook!
There has been a lot of action in the legal system recently about employment status and the role of workers vs self-employed, specifically the case involving UBER taxi drivers and more recently the case of Pimlico Plumbers & Charlie Mullins -v- Gary Smith in the Court of Appeal.
The status of an individual is important for a number of reasons, for example only employees have the right to claim unfair dismissal (for what that claim is now worth and depending on whether they can afford to bring it).
It is increasingly the case however that alleged self-employed individuals are asserting that they are in fact mislabelled and are workers.
Workers are not afforded the same level of protection as employees but they do have more rights that a self-employed person.
In the Employment Rights Act (ERA 1996) an employee is defined as “an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment”.
A contract of employment is described as “a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing”.
A worker is defined in the ERA 1996 as an individual who has entered into or works under (or, where the employment has ceased, worked 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.
When we look at the whether an individual is a worker we consider things like :- personal service Did the individual undertake under the contract to personally perform work or services? Is there any element of mutuality of obligation and also the right to substitute (though this is not definitive)
The Smith case mentioned above involved a plumber engaged by Pimlico Plumbers. Pimlico gave the impression to its customers that its plumbers were employees. They provided a branded uniform and vans with the company logo on the side. The plumbers had to raise invoices (to trigger payment), were VAT registered and personally accounted for tax and national insurance.
The Court of Appeal has now given a judgement indicating that it considers the plumbers are workers and not self employed.
This might not be a surprise following the UBER case where taxi drivers who operated under the Uber app also alleged worker status.
In that case the employment tribunal decided that the essence of Uber’s business was the provision of taxi services. The drivers contracted with Uber to personally perform work for Uber.
In the Pimlico case the Court of Appeal discussed the concept of personal performance and held that an unfettered right to substitute does not indicate worker status however a conditional right to substitute may not be inconsistent with personal performance and various factors will be taken into account such as the precise contractual arrangement, and the nature and degree of any fetter on a right to substitution.
Still confused? Well each case is fact sensitive so take some comfort in that.
What does establishing worker status mean?
Well workers are entitled to a number of things for example:-
1. Protection against unlawful deductions from wages
2. National minimum wage
3. Paid annual leave
4. Rest breaks
5. Whistleblowing protection
6. Discrimination protection
7. Pension contributions under the auto enrolment scheme.
In our experience the status issue normally arises out of another dispute however its always best to be prepared and to have considered the status of individuals in advance of any challenge.
It’s worth doing a reconciliation of your working relationships at some point to establish whether you consider that your business is really mislabelling individuals.
Also look at what agreements you have in place and do they really document the situation as it is working in practice? Do you have properly drafted documentation or have you amended an already unsuitable document to save costs. Have you at least had the document you amended checked? If not you should maybe review your terms?
If you have any concerns about employment or worker status in your business drop us a line and we can review your documentation and speak to you about any issues you may have.