The statutory definitions of the three categories of employment status have long been criticised as being unclear. Despite there being substantial case law interpreting these definitions it still remains difficult to set out a definitive list of criteria to determine whether an individual’s status is that of employee, worker or self-employed.
However, the recent Supreme Court judgment in the Uber case (Uber BV & Ors v Aslam [2021]) gave useful guidance on the approach that should be taken, particularly with what are regarded as “vulnerable workers”.
‘As most employment lawyers expected, the Uber judgement emphasized that it is the actual arrangements on the ground that matter and not what’s stated in the contract’ says Elizabeth Bartle, a partner in the employment law team with Ingram Winter Green. ‘The Uber judgment gives some clarity in determining worker status. The pivotal factor for the Supreme Court in finding that Uber drivers were workers, rather than self-employed, is the considerable control exercised by Uber when drivers had the Uber app switched on. In particular, Uber fixes the price and determines all aspects of the drivers’ interaction with passengers.’
The issue of employment status has risen to the top of the agenda in many companies as new IR35 rules regarding off-payroll working are in force from 6 April 2021.
In addition, differences in many health and safety rights between employees and workers should be removed from 31 May 2021. Currently only employees are protected against suffering a detriment, such as being demoted, because they left the workplace or took steps to protect themselves or others from a serious danger at work. In response to the High Court judgment in The Independent Workers’ Union of Great Britain v The Secretary of State for Work and Pensions [2020]), the UK Government agreed to introduce legislation which will ensure that workers are equally protected.
How we can help
Aside from potential liabilities to HMRC, getting an individual’s employment status wrong can give you a false sense of security. You may treat an individual as a worker and let them go without following a process or giving them notice. If they can convince an employment tribunal that they were actually an employee, you could face damages for unfair and wrongful dismissal.
Similarly, you may engage someone who describes themselves as self-employed and pay them less than the national minimum wage and not pay them for holidays. If it turns out they are actually a worker, you could be liable for significant back payments as well as being ‘named and shamed’ by the Government for failing to pay the national minimum wage.
One significant message from the Uber decision is that the contract has to match the reality of the working arrangements. An employment tribunal may disregard contractual provisions which try to classify the individual’s employment status.
We can help determine the status of any specific role in your business, and we can review your contracts and practices to advise on areas of risk. We can also help you to update policies and procedures to ensure that you comply with all the latest rules.
Please contact Elizabeth Bartle in the employment team on 020 7845 7443 or email elizabethbartle@iwg.co.uk.
In the meantime, to help employers and individuals to understand the key differences, the following table outlines the most significant rights and characteristics:
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.