Making the employee/worker/self-employed distinction in 2017 and what it means for your organisation.
Uber. Amazon Logistics. Deliveroo.
These brands have a lot in common despite operating in different sectors. They are established household names who have revolutionised their respective markets. They are also fighting ongoing legal battles about the employment status of their workers.
It all started with Pimlico Plumbers in 2012. One of their ‘contractors’, Mr Smith, was dismissed from the role after a heart attack and subsequent health issues. He took the London based company to an Employment Tribunal (ET).
During the case the ET determined Mr. Smith and his fellow contractors were;
Vital to the operation of the business, without which the business could not function
Unable to accept other work outside of the Pimlico Plumbers system
Subject to all rates and prices set by Pimlico Plumbers
Can not refuse work when assigned to them
Can not provide a substitute worker in their place
The ET found that Mr. Smith was not a contractor but a worker.
As a worker he is entitled to basic Employment Rights, such as reasonable adjustments for his health issues and paid annual leave.
The ET's decision further defined the employee / worker / self-employed paradigm, inadvertently revealing vulnerabilities in other organisations.
Uber state their position very clearly; they are an intermediary service which connects “riders” with drivers. They boast the benefits of being an Uber driver; you can choose when you work, you can choose which jobs you take. Yet, Uber sets all the rates and have been found to dock the drivers pay without advising the driver or providing an explanation.
When the case was raised it was found that after all fees and deductions, UK Uber Drivers were earning as little as £5.03 per hour. Before any miscellaneous deductions.
In October 2016 the ET defined the drivers as workers.
The consequences of which are HUGE, with 40,000 drivers in the UK alone the knock-on effect is a sizable dent in Uber’s $70 billion turnover.
The trade union, GMB, are building on the success of the landmark Uber ruling.
Challenging “old-fashioned exploitation under newfangled jargon” they began a new case against UK Express in March 2017. More specifically about the delivery drivers UK Express provide for Amazon Logistics.
The Amazon delivery drivers fall under the same category as the Uber drivers, classed by the company as “self-employed” they are paid far below the minimum wage and by the ET’s rulings actually fall under the status of Workers.
Sensing the changing of tides for corporate's against the individual, Deliveroo have employed some interesting tactics to avoid a similar fate.
Deliveroo provide restaurant food as a takeaway/delivery service, dispatched from the restaurant kitchen to your door by bicycle couriers.
Deliveroo are also a part of a Central Arbitration Committee (CAC) case brought about by the Independent Workers Union of Great Britain (IWGB). IWGB want to be the recognised union for some of Deliveroo’s Riders in Camden and Kentish Town so they can begin collective bargaining on their behalf.
Deliveroo’s self-employed riders;
Must wear Deliveroo’s branded uniform
Were subject to performance monitoring and reviews
Could not provide a substitution in their place
In advance of the case Deliveroo were found to be disseminating misinformation to it’s staff and making last minute changes to their contracts. They removed the performance monitoring clauses, and allowed for substitute workers, albeit without the level of detail needed for their CRB checked workforce.
If the CAC approve IWGB as a Union for the Deliveroo riders they will be simultaneously confirming that the Riders are workers and opening the floodgates for further litigation for the food delivery company.
What is the legal definition?
Whilst these cases have provided more detail into the interpretation of the current legal distinctions, practitioners are still asking for further legislation to stop this practice being continued across the country.
Mr Field, who lead the Commons inquiry into Self-Employment and the Gig Economy, stated:
“The Government must close the loopholes that are currently allowing “bogus” self-employment practices, which are potentially creating an extra burden on the welfare state while simultaneously reducing the tax contributions that sustain it." (Quote)
Ultimately the current accepted distinctions focus on the amount of control the employee/worker/self-employed person has in the contract and transactions it shares with the company.
Running my own Writing business, I am the prototypical self-employed person. I am registered with HMRC as self-employed. I set my rates and make sure to factor in the percentage of Tax and NIC I am required to contribute. Anyone who hires me signs my contract on how I work. I can choose what work I want to do and for which clients.
Workers have less choice, they are subject to the company deciding on the rates, the time, location and way that the work is done. Whilst they aren’t as restricted as those classified as employees they are working for that company directly. The company is not their client. They have basic employment rights.
Employees get the full kit and caboodle of full employment rights, benefits and perks.
What does this mean for your company?
It is vital that you ascertain the status of your workforce right away. If there is any doubt you are leaving your organisation open to litigation and that needs to be resolved and locked down as a priority. The high-profile nature of these cases making national news means anyone in a grey area, intentionally or inadvertently will be able to spot an opportunity.
Check any self-employed contributors are truly independent and operating with your company on their terms.
Are any workers really employees? How much freedom do they have? How vital are they to the operation of your organisation?
Incorporate a review of your workforce status into your annual housekeeping.
The next few rulings will have a massive impact on employment law and the interpretation of it. However, the Government have yet to take any legislative proposals forward on the matter.
Pimlico Plumbers have taken their case to the Supreme Court stating they are in a different category to other low-paying “gig” services like Uber and their contracts were legally upstanding.
Uber, facing monumental payouts, are appealing the ET’s decision. Amazon Logistics and Deliveroo are awaiting hearing dates.
In the meantime, make sure your company is doing the best for its workforce. Work on the assumption that the individual's role needs to be defined and clear, accounting for the variables exposed in these examples.