Workers vs self-employed - are your workers correctly classified?
How the latest ruling against Uber could affect the gig economy
Date: Wednesday 2nd November 2016
Last week saw the outcome of a landmark case between Uber and the GMB Union following a hearing in July.
An Employment Tribunal ruled that Uber drivers should now be classified as “workers” rather than “self-employed”. This has far reaching consequences for the firm as drivers will now be entitled to holiday pay, statutory sick pay and the right to be paid the National Minimum Wage.
Repercussions throughout the gig economy are thought to be highly likely which will lead to a rethinking of employment status of these workers and clarification of employment rights.
By definition there are three main categories of employment status in UK employment law; self-employed, employees and workers.
Self-employed have freedom over how much or how little they work and are not entitled to the National Minimum Wage, paid holiday or sick pay. They can however send another party in their place to carry out work if they are unable to. They can also take on work from multiple parties at any one time.
Employees are subject to the ‘control’ of the employer and do not have flexibility to refuse work offered by the employer. Employees are entitled to the National Minimum Wage, paid holiday and statutory pay.
Workers are between self-employed and employees. They are entitled to holiday pay and the National Minimum Wage but do not have the right not to be unfairly dismissed. They are required to provide services personally and cannot send someone to their work unlike the self-employed.
Now the definition of a ‘worker’ has been clarified, this has led to some misunderstandings among businesses as to who is classed as self-employed and who is a worker. As per the definitions above, this should give more clarity around what the differences are.
However, the outcome of the case has more far reaching consequences which could result in increased costs to the gig economy to comply with new employment laws which will likely be passed on to the consumer particularly for services such as couriers, fast food delivery and portable cleaning operators who are thought to be hit the most. Workers, as they are classed, are entitled to minimum legal rights such as the right to claim unfair dismissal, receiving statutory sick pay, the National Living Wage or National Minimum Wage and not being given work that totals more than 48 hours per week.
Companies like Uber where new contracts will need to be reissued to workers, will also need to place the workers on to their auto enrolment pension schemes and back date contributions.
Organisations should also make sure that all workers have the right to live and work in the UK otherwise they could be at risk of facing heavy fines and criminal sanctions.
The outcome of the case could still be appealed and we will wait to see whether this case sets legal precedent. In the meantime employers should check whether they need to change the statuses of individuals and issue contracts accordingly, which include paying holiday and the National Minimum Wage.
If you are unsure about how this ruling affects your business then we can help you to review and put in place recruitment and procedures to ensure compliance with the law. We can also help you to issue written Ts & Cs to workers outlining pay rates, hours of work, role and responsibilities, sickness, holiday and equal opportunities.
Contact us on 0207 977 9200 for a more detailed conversation or email email@example.com