Well publicised cases (such as that of Uber) involving what is fast becoming known as the “gig economy” have brought into sharp focus an issue which Employment Tribunals have been grappling with for sometime. The issue of employment status.
Employment law entitles individuals to different legal rights and imposes different legal duties on those companies engaging them depending on their employment status. Any given person whether working in the gig economy or not will fall into one of three categories:
- worker; or
The reason why employment status is so important is that if someone is determined to be an employee they will have significantly more rights than someone who is self-employed. An employee has an entitlement to statutory sick pay, the right to request flexible working and most crucially the right to not be unfairly dismissed. An individual considered to be self-employed will not be afforded any of these rights and will usually be considered to carry the risk of the failure or success of their own business.
In between employment and self-employment there is the intermediate category of a “worker”. This is a concept incorporated into UK employment law as a result of EU Directives. Workers cannot bring claims for unfair dismissal but they do still have the right to not suffer unauthorised deductions from wages, the right to earn the National Minimum Wage and significantly they have an entitlement to take paid annual leave.
The definition of employment set out by statute is deliberately broad to encompass what can be a multitude of different circumstances. The label that the parties attribute to the relationship does not necessarily determine the true status of the relationship. Employment Tribunals have the power to look past what is stated in the contract to consider all relevant factors governing how the relationship works in practice.
The test applied when deciding someone’s employment status incorporates a mixture of factors including, how much control is exerted over the way they work, whether they do the work personally and whether both parties have an obligation to give and conduct work. There can be a seemingly endless number of other contributing factors to deciding someone’s employment status such as who pays tax and national insurance, whether the individual provides their own equipment, whether they are subject to the company’s policies and procedure and how integrated an individual is into the business.
Following the credit crunch and subsequent recession the employment landscape has changed, these changes include the rise to prominence of the gig economy. Proponents of the gig economy say that it reflects changing attitudes towards work by giving people the flexibility to work how and when they choose but critics say that it is exploitative because the relationship is often balanced heavily in favour of the company in order to remove employment rights.
The recent well publicised Employment Tribunal case involving the taxi company Uber shows the current thinking of Tribunals when deciding some of the employment status issues thrown up by the gig economy. Uber enables their customers to book and pay for a taxi through a smartphone app, which is currently in operation in approximately 70 different countries.
Uber maintains its drivers are self-employed because their drivers purchase their own vehicles and incur the expense of running them, they are entitled to work for competitors and they are self-employed for tax and national insurance purposes.
The Tribunal disagreed and found the drivers to be workers. Although drivers are expected to provide their own vehicles, cars can only be used from a specified list set by Uber. It was agreed the drivers are given the option to accept a job but they are only given 10 seconds to accept and in the event three jobs in a row are not accepted, the driver will be logged off the app for 10 minutes. The Tribunal interpreted this as a form of disciplinary action and control set by Uber. The mapping software used by Uber determines the route that should be used by the driver, monies can be deducted from the driver’s payment if a customer complains and drivers are not permitted to use a substitute (by sharing the driver’s app login). The Tribunal therefore found that the drivers were not in business on their own account and therefore could not be truly said to be self-employed.
The case means that drivers will now be looking at accruing 5.6 weeks’ worth of annual leave, being paid the National Minimum Wage and consideration will also need to be given to whether money deducted from drivers’ pay as a result of customer’s complaints has been done so unlawfully. This case is only an Employment Tribunal case and does not therefore need to be followed by other Tribunals, however there has also been a recent Court of Appeal case called Pimlico Plumbers Ltd and anor v Smith on the same issue which supports the position adopted by the Tribunal in the Uber case which Tribunals will be required to follow the next time a case involving the gig economy is heard.
Whilst the issue of employment status will always be finely balanced and decided on specific facts, recent cases on this point demonstrate a clear direction of travel in the Courts to support individuals working in the gig economy.