This is a question that still leaves people stumped when the true nature of the employment relationship is evaluated.
There have been a number of cases brought before the Employment Tribunal and Court of Appeal surrounding the issue of employment status. The cases predominantly evolved around the gig economy and most noted cases were those of Pimlico Plumbers, Addison Lee and Uber. The Court in those cases all found that the individuals concerned were workers not self-employed.
The Uber case came before the Court of Appeal in December 2018 where a majority of the Court of Appeal agreed with the earlier decision of the Employment Tribunal that Uber drivers were classified as workers under the Employment Rights Act 1996, for the purposes of the National Minimum Wage Act 1998 and the Working Time Regulations 1998. This meant they were entitled to protection from unlawful deduction of wages, to receive the national minimum wage and entitlement to paid holiday leave.
In the Uber case, the majority found that Uber was not the drivers’ client, quite the opposite, that the drivers had no direct contract or control over their terms with their customers and that the agreements between the drivers and Uber purporting to set out a self-employment relationship were essentially a sham, relying on the case of Autoclenz. It was also found that for the purposes of working time, this began as soon as a driver logged onto the app and were ready to accept trips.
There was however one Judge, Underhill LJ, who challenged the majority decision quite heavily and the Court of Appeal have given Uber permission to appeal the decision to the Supreme Court. The Supreme Court ruled in February 2021 that all Uber drivers were workers, meaning they are entitled to the minimum legal wage, paid holiday time and pension rights.
These cases have highlighted the issue of employment status and will hopefully lead to companies considering employment status in more detail, however grey areas still surround this issue. The Government has committed to reforming the legislation so as to provide clarity on the employment status test particularly to ensure parity with the HMRC and this may result in changes to the current types of employment status. This year will hopefully provide for a clearer view on what employment status looks like.
Should you require any advice and assistance in connection with employment status please do not hesitate to contact us.
If you have concerns about your own employment status or that of an individual your business engages, then please do not hesitate to contact our Business department.