Hello and welcome to our latest employment video. My name’s Paul Griffin and I’m Head of the Norton Rose Fulbright Employment Team in London.
In UK employment law, a person’s employment status determines both their rights and responsibilities. An individual can be an employee, a worker or self-employed. Whilst traditionally individuals were employees or self-employed, there has been a significant rise in “worker” status. In today’s video, I’ll be looking at recent cases on worker status, and consider why the status of those who work for you is important.
What is a worker?
Workers are defined in the Employment Rights Act 1996 as those who work under either:
- A contract of employment; or
- Any other contract whereby they agree to perform personally work or services for another, who is not a client or customer of a business run by them.
Essentially, therefore, workers include employees and also those who are self-employed who provide their services as part of a business or profession run by someone else.
This differentiates them from the genuinely self-employed or independent contractors, who carry on a profession or business on their own account, and enter into contracts for services with clients or customers of their business.
There have been a number of recent cases on worker status which, whilst they don’t change the law, have highlighted that tribunals are ready and willing to follow the approach of the Supreme Court in the 2011 case of Autoclenz and Belcher, and to look beyond the contractual documentation when deciding whether an individual is a worker or an independent contractor.
The first case concerned the taxi business, Uber, and the status of its taxi drivers. Uber argued that the company was simply a linking platform matching passengers with self-employed drivers. There was complex contractual documentation describing passengers as entering into contracts with the drivers, but it was found by the tribunal that this did not reflect the reality of the situation. There was also a significant level of control by Uber over the drivers. As a result, in spite of what the contract said, the tribunal held that they were in fact workers.
The second case involved the status of a cycle courier engaged by CitySprint. In the contractual documentation, the courier was described as self-employed. However, once again, the tribunal disagreed. In fact CitySprint exercised a high level of control over its couriers, and the tribunal held that the claimant was a worker, and not in business on her own account.
The final case involved Pimlico Plumbers and whether a plumber who worked solely for them over a period of 6 years, was self-employed or a worker. During this time, the claimant filed tax returns on the basis that he was self-employed, and the contractual documentation described him as an independent contractor.
But the tribunal, EAT and Court of Appeal all disagreed.
The Court of Appeal stressed that a distinction is to be drawn between:
- Firstly, those employed under a contract of service – “employees”
- secondly, those who are self-employed, carrying on a business or profession on their own account, who enter into contracts with clients or customers to provide work or services for them; and
- finally, those who are self-employed, who provide their services as part of a business or profession carried on by someone else.
The plumber in this case fell into the last category. In particular the degree of control exercised by the company over the claimant, and the fact that there were onerous restrictive covenants in the contract, was inconsistent with the company being a customer or client of a business run by the claimant.
Why is employment status important?
It’s important to know whether someone who works for your company is an employee, a worker or an independent contractor, because this will determine the level of employment protection rights which they enjoy.
Workers enjoy various employment rights, such as the right to the national minimum wage; the right to paid holiday and the right to rest breaks, whilst employees enjoy the full range of additional employment rights such as protection from unfair dismissal; the right to a statutory redundancy payment; maternity rights and the right to statutory sick pay.
Independent contractors, on the other hand, are entitled to none of these rights.
What can businesses do to minimise the risks?
When drafting contractual documentation for someone who works for you, ensure that the express terms reflect the intended status of the individual.
For example, if you intend to engage someone as an independent contractor, key indicators of this would include:
limited control over the individual; their right to appoint a substitute to carry out the work; a lack of integration into your business; a lack of exclusivity; and the fact that they market their services to the public.
You would also need to make sure that the express contractual terms reflect the reality of the business relationship between you, because the courts will look beyond the contract when deciding whether an individual is genuinely an independent contractor or not.
This video is intended to give you a summary of the recent cases on worker status. However, if you would like any further information, or have any questions on any aspects of today’s topics, then please don’t hesitate to contact us.
And, finally, our monthly competition:
What was the name of the cycle courier in the CitySprint case?
The first person to email me with the correct answer will receive a bottle of champagne.