Working: employed or gigging? 

We lawyers have been arguing about the status of ‘employees’ since the dawn of the first codified employment legislation in this country and the advent of the industrial tribunals. Cases such as Ready-Mixed Concrete v Minister of Pensions & National Insurance [1968] QB 497 and Carmichael v National Power Plc [2000] IRLR 43 gave us the irreducible minimum of obligations without which no contract of employment can exist.’ Factors such as the mutuality of obligations between the company and the individual, the control exercised by the ‘employer’ over the individual on a day-to-day basis, the individual’s level of integration within the company, and the economic reality of the situation. This is so vitally important because not all those ‘employed’ are in fact ‘employees’ and therefore do not have access to the same rights, such as the national minimum wage, paid holiday, sick leave, etc.

The statutory definition is set out in section 230(1) Employment Rights Act 1996 (‘ERA’). This section states: an ‘employee’ is: ‘an individual who has entered into, or works under, a contract of employment’. Section 230(2) defines a contract of employment as a contract of service.  For comparison a self-employed person may refer to themselves as working under a Contract for Service.

The Court of Appeal held in Protectacoat Firthglow Ltd v Milkos Szilagyi [2009] EWCA Civ 98 and the Supreme Court affirmed in the case of Autoclenz Ltd v Belcher and Others [2011] UKSC 41, that despite any label given to a relationship by the parties, the Court should look behind that agreement and examine the actual nature of the working relationship.

That was all well and good but in more recent years we have seen an explosion in a new type of ‘employment’, with the advent of the zero hours contract and the ‘gig economy’. According to one definition, the ‘gig economy’ is: ‘a labour market characterised by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs’. Taking opposing partisan viewpoints- it is either a working environment that offers flexibility with regard to employment hours, or a form of exploitation with very little workplace protection.

Recent caselaw includes Dewhurst v CitySprint UK Ltd ET 22025/2016, a first instance tribunal decision which held that Ms. Dewhurst was a worker not self-employed, and Aslam, Farrar & Others v Uber & Others ET 2202551/2015, another first instance decision which is awaiting the appeal hearing listed in the EAT in September 2017, where the tribunal determined that:

The notion that Uber is a mosaic of 30,000 small businesses linked by a common platform is to our minds faintly ridiculous… simple common sense argues to the contrary.’

The Court of Appeal handed down judgment in Pimlico Plumbers Ltd & Another v Smith [2017] IRLR 323 earlier this year stating that Mr. Smith was a worker qualifying for sick pay rather than a self employed contractor.

At the time of writing Deliveroo’s case is being assessed by the Central Arbitration Committee with regard to the national minimum wage and holiday pay.

Yesterday, the ‘Taylor Review of Modern Working Practices’ entitled ‘Good Work’ was published. It is an extensive document that includes proposals some of which will be able to be rolled out easily and quickly, others will require extensive drafting and Parliamentary process, but it is at least perhaps an indicator of the direction of travel. Some of the key proposals in my view are:

  • Keeping the distinction between employees and workers, but renaming workers who are not employees ‘dependant contractors’ page 35;
  • Amending the legislation cited above to include the case law principles;
  • Placing more emphasis on control within the definition of worker- page 36;
  • Amending the NMW to make it clear that gig-economy workers allocated work through an app are undertaking a form of output work and will not have to be paid the NMW for each hour logged on when there is no work available- page 38;
  • Extending the right to a written statement of terms and conditions to workers as well as employees- page 39;
  • Requiring written statements to be given on day one of employment;
  • Extending written statements to include a description of statutory rights;
  • Giving agency workers the right to request a direct contract with the end user after 12 months on an assignment- page 48;
  • Giving those on zero-hours contracts the right to request guaranteed hours after 12 months;
  • Giving HMRC enforcement powers for sick and holiday pay- page 59;
  • Allowing Claimants to bring a claim to the tribunal (without an issue fee) to determine employment status as a preliminary issue prior to any substantive claim- page 62;
  • Placing the burden on the employer in the tribunal to prove that the Claimant is not an employee or worker- it is currently the other way round.

We will have to see how much of this becomes law and what the appellate courts make of the cases before them in the mean time, but it seems that there is still no clear definition of ‘an employee’ thanks to both social and technological advances.

Any one wishing to find out more about their potential employment rights, should contact Sarah Hornblower in Chambers.

To read more about Sarah, please see her Chambers profile here.