Clamping down on bogus employment practices

The Work and Pensions Committee is calling on the government to close the loopholes that pave the way for bogus self-employment practices.

The Committee launched an inquiry into self-employment and the gig economy, which has been curtailed in light of the impending general election.

Throughout their inquiry, they heard evidence from a number of companies, including Uber, Amazon, Deliveroo and Hermes and from those who work for these organisations.

Committee’s findings and conclusions

In their report, the Committee was not convinced with arguments put forward by companies that flexible work is dependent on the individuals being self-employed. The inquiry drew attention to evidence from workers about how inflexible working times were and how difficult it was for them to take time off for a holiday or because they were sick.

They also picked up on the number of individuals who have brought their claims to Employment Tribunals and courts and have successfully contested their employment status. To summarise, the latest cases include:

  • In October 2016, an Employment Tribunal found against the company Uber, which allows people to book and pay for a taxi via an app. It found that the people who work for Uber are workers, not self-employed as the company claimed, and as such they are entitled to workers’ rights. Uber have now been granted the right to appeal and the appeal will be heard in September.
  • In January 2017, a courier with the logistics company City Sprint also won her case regarding her employment status.
  • Most recently, the Court of Appeal ruled against Pimlico Plumbers, stating that their self-employed contractor was actually a worker and had the right to holiday pay, minimum wage and all the other rights that workers are entitled to.

The Committee found that contracts explicitly stated that individuals were not permitted to dispute their employment status as ‘self-employed’. One contract went one step further as it did not allow them the right to challenge their employment status in court.

The Committee considered that it is easy for companies to deny workers the rights that come with being a worker or an employee, which means they are not protected from exploitation and poor working conditions. This is why the Committee urges that there should be an assumption that individuals who work for these companies are considered as “workers” rather than “self-employed” by default. This would protect individuals working for these companies and put the burden on companies to provide rights. If a company wanted to deviate from this, they would need to argue their case.

What does this all mean for me?

This report does not change the law, but it does give the government and employers food for thought.

The flurry of case law recently does highlight the need for employers to review current working arrangements. For example, if you are a pharmacy owner and you engage locums who have worked regularly for your pharmacy over a sustained period of time, you may need to think about their employment status. They may declare themselves as self-employed, but in fact, they may be an employee or worker and this widens the rights they are entitled to.

Ultimately an Employment Tribunal will analyse the nature of the working relationship in practice, not just the terms written in a contract. They will look at factors such as if they have a regular pattern of work, whether you have an obligation to provide work, whether they can refuse work and send in someone else, are paying their own national insurance and tax, are under your control and direction, are treated like other employees, receive employee benefits, etc.

If you start imposing certain requirements on them, as Uber does on its drivers, the individual may be considered a worker or employee and you may end up with a whole host of obligations that you weren’t prepared for.

We are waiting for a separate independent review into modern employment practices, which is due to be available in June 2017. It is likely it will contain a number of recommendations which the government will consider.

Employment status is an extremely complex area of law, therefore seek legal advice at the earliest opportunity to avoid expensive mistakes.

Director of Legal Services

James Tamm

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