Employment Status

18 June 2018

Employed or self-employed - another landmark decision in employment status

Establishing the employment status of individuals has been an on-going matter of dispute for decades.  There is often a thin line between whether an individual can be considered self-employed, employee or a worker.  In the last year alone we have seen a trend in this area of employment law with self-employed contractors being able to establish themselves as workers. 

On 13 June 2018 the Supreme Court (SC) issued its ruling in the case of Pimlico Plumbers v Gary Smith.  Mr Smith had worked for Pimlico Plumbers (PP) for six years as a plumbing and heating engineer until his contract was terminated by PP in 2011.  In Mr Smith’s claim against PP he alleged, among other things, that he was both an employee under a contract for service and a worker for PP whilst PP argued that he was self-employed.  The Employment Tribunal agreed in part ruling that although Mr Smith could not be deemed an employee, he was a worker for the purposes of section 230 (3)(b) of the Employment Rights Act 1996.  The SC also agreed. 

This is another landmark decision in the battle for worker status next to the ruling in the Uber case in late 2017.  The decision in Uber Case (Aslam and others v Uber BV and others), is also testament to this current trend.  The claimants in this case were self-employed Uber drivers who claimed to be workers. Uber lost its appeal and the court ordered them to treat the drivers as workers; meaning they were entitled to enjoy some of the rights enjoyed by those with employee status like minimum wage, sickness and holiday pay.  Also at the back end of 2017 was the ruling by the Court of Justice of the European Union (CJEU) in King v Sash Windows (2017) where Mr King, a self-employed sales person sought to claim his accrued holiday pay when the respondent, Sash Windows, terminated his contract.  Mr king argued this on the basis that he was an employee.  Again, the Tribunal steered away from employee status but agreed that he was a worker.

In all of these cases the claimants were supposedly self-employed. Something that businesses should be mindful of when entering into contracts with self-employed individuals is that the control is one of the elements that the courts will use to determine the status of that individual.

At this rate the term ‘independent contractor’ will become a thing of the past especially in the fast growing ‘gig’ economy.

Following the recommendations made by Matthew Taylor in his report on the ‘Review of Modern Working Practices’ the Government issued a consultation paper, in February 2018 which closed on 1 June 2018, seeking views on how the complexities of determining employment status can be simplified.  This will be something to look out for.

If you would like any assistance in reviewing your contracts or manuals etc then please give us a call on 01455 852028 or contact us.

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