Bridge HR articles

Various companies have hit the headlines recently over the employment status of their workers. The most prominent and recent ruling confirmed that Uber drivers were indeed workers and thus, are entitled to holiday pay, national minimum wage and other protections. The so called “gig economy” which relies upon self-employed structures (to save on tax and NI) has grown exponentially in recent years and placed the issue of employment status under closer scrutiny, for example, with the right to make various claims including unfair dismissal, accrued rights for redundancy, notice and holiday pay too.  Unions and contractors are keen to challenge their employment status and improve their rights and protections.

The recent ruling from the Court of Appeal held that those working as self-employed contractors, on that occasion relating to a particular group of Deliveroo riders in north London, were not in fact workers and therefore, were not entitled to the usual employment law protections and, in this case, were not entitled to have union recognition.

What was found to be a key distinction between employed and self-employed status, amongst many considered, was the presence of a genuine right to send a substitute by the riders to do their work, which was a distinct difference between the Deliveroo and Uber cases. This is something we encourage clients who are considering using self-employed contractors (where appropriate) to build very clearly into both their express written terms and the day-to-day practical arrangements on the ground - with a view to helping support their self-employed status case should HMRC investigate or should self-employed contractors try to assert employment rights.

Employers should be aware that there remains no ‘one size fits all’ type approach and for anyone using self-employed contractors, we strongly recommend that you review the terms of engagement as well as current employment practices to try to avoid any future issues of a similar nature and being mindful of IR35 where Ltd companies are being used.  We do audit such arrangements so do get in touch if in doubt.

We should also add that the Labour party appears to be proposing to scrap these distinctions and create one single worker status.

Why is employment status important?

There are broadly three main types of employment status recognised within the UK and employers should be aware of these and the differences between them because each offers the individuals completing the work various ranges of employment rights and protections. with the highest protection being offered to employees.

Worker status is what most of these recent cases are attempting to establish – and still offers some protections, for example the right to be paid national minimum wage, annual leave entitlement and rest breaks.

Self-employed “contractors” used by companies such as Deliveroo, have very limited rights. Some rights around discrimination and health and safety remain, but otherwise there is no right to annual leave, minimum wage, sick pay etc.

Therefore, employment status is important and the reason many individuals seek to take legal action to claim that they are workers or employees, given the potential financial benefits and protections they may receive if successful. If you get this wrong, it can bring a host of unexpected employment law and PAYE liabilities.

For more information contact your team contact, call the office on 0194 360 295 or add your comment and queries below and a member of the team will get back to you.