COMPLIANCE
The interaction between the gig economy and employment status
LoraMurphy ACIPP, CIPP editor, provides an overviewof some of the recent cases that address the issue of employment status
A n individual’s employment status is crucial in determining what rights they are entitled to, and what the employer’s responsibilities are towards them. It is a crucial area and employers must ensure they get it right, particularly because employment status can often be the focus of tribunals. What is employment status? The main types of employment status are: ● worker ● employee ● self-employed and contractor ● director ● office holder. An individual’s employment status should be determined based on the details of how they work, and there are a range of factors to consider before establishing employment status. The gig economy, which is growing rapidly, has the potential to cause ripple effects across the understanding of existing employment statuses. The gig economy is a labour market that consists mainly of short-term contracts and freelance work, as opposed to more traditional, permanent jobs. Uber (Uber BV v Aslamand others) Possibly the most high-profile case in recent history is the Uber judgement centred on whether Uber drivers were self-employed or workers. Following claims from drivers for unlawful deduction of wages, as they were not paid the national minimum wage (NMW), Uber asserted that its drivers were self-employed and subsequently not entitled to the NMW. Uber claimed this was because they owned or hired their own vehicles and chose when they worked. Uber also argued there was a written contract between Uber and its drivers, but a separate contract between drivers and their passengers, so drivers did not work for Uber, but rather for their customers. At employment tribunal (ET), employment appeal tribunal (EAT) and the Court of Appeal, rulings were made against Uber and in favour of its drivers. It was determined that Uber drivers were classed as workers, and not self-employed individuals.
On 19 February 2021, the Supreme Court passed a landmark judgement, upholding the previous decisions. Uber were required to pay their drivers at least NMW, allow them to take paid annual leave and provide access to a pension scheme. Drivers were protected from unauthorised deductions from pay and discrimination. The ruling also confirmed drivers are classed as working when they have the Uber app switched on, waiting for passenger journey requests. The result is that Uber drivers should be paid at least the NMW for any time they spend logged in to the Uber app. There were five key elements that resulted in Uber drivers being classified as workers, and not self-employed: ● Uber drivers were required to sign and accept a written agreement they could not amend ● Uber decided the fixed fare for each trip and the service fee taken ● Uber handled communication between drivers and passengers ● Uber controlled how drivers delivered their services ● Uber drivers could be penalised for declining or cancelling too many passenger journey requests. The decision was clearly made based on the level of control that Uber has over its drivers, but this case also highlights how an individual’s employment status rests on various factors, so each situation needs to be assessed separately. Addison Lee (Addison Lee Ltd v Lange and others) Mr Lange and colleagues brought a claim against private hire cab and courier company, Addison Lee, claiming they were workers. They held contracts with Addison Lee which named them as ‘independent contractors’; however, they were allocated jobs when logged into the system, and, as with Uber drivers, Addison Lee drivers could be penalised for rejecting jobs. At ET, it was determined that Addison Lee drivers were classed as workers under the Employment Rights Act 1996. The company appealed to the EAT which was dismissed. They requested permission to appeal
against this. The Court of Appeal granted this permission but stayed the appeal pending the decision made in the Uber case. The Uber case set a precedent when the Supreme Court ruled that Uber drivers were workers, and the Court of Appeal subsequently refused Addison Lee permission to appeal. Both cases highlight to organisations that it is not as simple as looking at contractual documents when determining an individual’s employment status. It is far more complex and the relationship between individual and employer needs to be explored in detail. Deliveroo (Independent Workers Union of Great Britain v Central Arbitration Committee) This case differs from that of Uber and Addison Lee. Deliveroo riders were deemed to be self-employed and not workers. The Court of Appeal was the latest to confirm this decision at the time of writing. In 2017, the Central Arbitration Committee ruled that Deliveroo riders were not workers because they were not required to carry out work and could instead send a substitute for the job(s) they accepted or those they were about to accept. The fact that riders had options regarding which deliveries to accept or reject was also considered and highlighted the degree of choice drivers were given with their work. In 2018, the Independent Workers Union of Great Britain appealed this decision at the High Court, but it was rejected. It ruled that Deliveroo riders are self-employed and cannot create a collective bargaining unit. Again, this decision centred on the fact that riders can send a substitute to carry out their work if they wish. What next? With the recent flurry of court cases, the Labour party pledge to create a single ‘worker’ status, and the continued growth of the gig economy, what will the future of employment status look like? It feels like change is afoot, with more focus being placed on protecting individuals not classed as traditional employees. Watch this space… n
| Professional in Payroll, Pensions and Reward | October 2021 | Issue 74 24
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