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21st May 2018

Legal Issues – Employment status

We’ve written a number of updates on this topic in the last couple of years, as there have been both case law and legislative developments happening during that time.

Much of the case law has related to companies such as Uber, CitySprint and Hermes engaging individuals they deem to be self-employed contractors, who have then been found by the Employment Tribunal (ET) to be workers following claims from those individuals.

Uber was particularly prominent in the headlines when it lost its case, with a judge finding that two of its drivers were workers and not self-employed, irrespective of how watertight the wording in the contractor agreements was. Uber appealed that decision but in November 2015 was again on the losing side. It will try its luck again with the Court of Appeal in October this year.

This month has seen another company lose a similar appeal. A case against Addison Lee in 2017 led to a finding that one of its cycle couriers was a worker and not a self-employed contractor. The Employment Appeal Tribunal (EAT) has just recently confirmed that decision.

A third hotly contested case is that of Pimlico Plumbers v Smith, which was heard by the Supreme Court (SC) in February 2018. The lower courts, including the Court of Appeal, have all agreed that the claimant in question was a worker and not a self-employed contractor. With the SC being the highest court in the UK for employment cases, it will be interesting to hear its decision and whether that affects any other cases being heard on this subject.

Outside of the courtroom, the government is also taking steps to make changes to the law on employment status, albeit at a much more reserved pace than the judiciary.

The Taylor Review, a report by Matthew Taylor and his team into modern working practices in the UK, was published in July 2017. On 7 February 2018 the government issued a response to the recommendations in Taylor’s report.

While there are no immediate changes, the government has pledged to introduce developments in this area, with one particular focus being on protecting the rights of workers. For example, it proposes to introduce a right to an itemised payslip for workers, a right currently enjoyed only by employees. It also wishes to give all casual and zero-hours workers the right to request a more ‘stable’ contract from day one, meaning a contract with regular hours, to provide more certainty.

The Taylor Review made a couple of recommendations that the government will not be implementing, including an assumption of worker status unless the employer can prove otherwise, and re-introducing ‘rolled-up’ holiday pay, which means that a worker is paid holiday pay at the same time as their normal pay. The latter was ruled unlawful by the European Court of Justice in 2006.

In other areas the government wants more information before it decides what to do next, and has announced that it will launch four further consultations on enforcing rights, agency workers, increasing transparency in the labour market and employment status.

The changes already proposed by the government are likely to come into force in the relatively near future, but given that further consultations are being put in place it is likely that we will continue to see developments in this field into the 2020s.

In the meantime, if you have any questions on any of the issues raised in the above article, such as the employment status of individuals carrying out work for you, please contact Seanpaul McCahill.

21st May 2018