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Oct 2017

Worker Status

Working status is continuing to develop but whether this is giving us clarification or causing further confusion is debateable. There are many cases that have been, and cases that are continuing to go through the Tribunal, but these, in my view, have complicated the already ambiguous issue of whether an individual should be classed as an employee, a worker, or self-employed. The question of employment status has been blurred in recent years by the evolution of the status of the ‘worker’. Further complications are likely to arise with the emergence of the ‘gig economy’ and the increasing demand by employers for short-term contracts, zero hour contracts and freelance workers. This article seeks to provide a brief insight as to what constitutes the status of a worker and how this can be construed against the status of an employee and self-employed contractor.

A ‘worker’ is defined by Section 230(3) of the Employment Rights
Act 1996 as ‘an individual who has entered into or works under (a) a contract of employment or (b) any other contract, whether express or implied…whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not…that of a client or customer’.

The case of Byrne Brothers Ltd v Baird and others [2002] sets out guidelines for each element of the statutory definition of a worker. As some core legal protection only applies to employees, the classification of a ‘worker’ is said to provide some protection to those who fail to qualify as employees.

Although all employees are classified as workers, not all workers are classified as employees. Both will work to the terms of a contract of employment and will generally be under an obligation to carry out the work personally (workers may sometimes be entitled to subcontract the work). The most important difference between an individual’s working status is the rights that are conferred on them under Employment law.

Whilst employees are given the right to protection against unfair dismissal, Statutory Redundancy Pay, the right to request flexible working, minimum notice period and time off for emergencies, to name a few, these rights are not conferred on workers. A worker’s rights are limited to an entitlement to the National Minimum Wage, protection against unlawful deductions from pay, protection against unlawful discrimination, protection for ‘whistleblowing’ and the right to not work more than 48 hours on average per week. Employment law offers little, if any, protection to self-employed contractors as they are considered to be their ‘own boss’.

The Employment Tribunal has this week ruled that three drivers working for the organisation Addison Lee, should be classed as workers as opposed to self-employed independent contractors, and as such, are entitled to essential workers’ rights. The claim was made on the basis that there was a contractual obligation for the drivers to provide personal service for the company and they should therefore be given the status of a worker. The Tribunal rejected Addison Lee’s argument that although the drivers were using the company’s branded cars, each one in reality was ‘running a small business’. It instead ruled that the drivers were in a ‘subordinate position’ to the company. The Claimants’ new status as a worker will now offer them enhanced legal rights and will entitle them to receive the National Minimum Wage and holiday pay.

This ruling is not the first of its kind and almost certainly will not be the last. Pimlico Plumbers lost a battle in the Court of Appeal earlier this year whereby they argued that the Claimant was a self-employed contractor. The Court of Appeal upheld the Employment Tribunal’s ruling that the Claimant was a worker on the basis that he had provided work personally for the company, he was obliged to work set hours on agreed days and that he was highly restricted in his ability to work in a competitive situation. It could not therefore be held to be ‘in business on his own account’.

This trend is likely to adversely affect the outcome of Uber’s upcoming appeal against an Employment Tribunal’s ruling that its drivers should be given the status of worker. The Tribunal is also due to hear similar cases involving couriers for the delivery companies Hermes and DX.

These cases will undoubtedly have significant implications for the ongoing dispute over employment status. Tribunals are increasingly willing to look beyond the labels businesses use for their staff and will take into account the reality of working relationships and arrangements.

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