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Employment Status
Employment Status

Workers? Employees? Self-Employed?

Workers? Employees? Self-Employed?

Late last year the Uber drivers won an important employment tribunal case where they were found to be workers and therefore were to be awarded worker rights.  At the same time there was a second ruling which seemed to contradict the Uber ruling when in the case of Gilham v Ministry of Justice the EAT found that whistle-blowing protection did not extend to District Judges as they are not workers.

These decisions got a great deal of media attention, particularly the Uber drivers case, but what do they mean in practice?

What’s the impact of this ruling?

It is important to note that Uber is appealing this decision so in reality, no one really knows what the outcome will be.  The EAT will now hear the case and only when they reach a decision will there be some clarity for employers.  We’ll keep you posted on developments but below is some further information on the different types of employment status so you can start familiarising yourself with the subject and be prepared if the ruling is upheld and therefore those people who are self-employed gain additional rights.

So isn’t “Worker” and “Employee” the same thing?

There are important differences between people deemed to be Workers and those deemed to be Employees. Some Employment legislation relates to Workers and Employees and some to Employees only so it is important for you to make sure that you are clear as to which category your workforce fits in.  Below are the definitions of the different types:

  • Worker – A Worker is anyone who does work for your company directly.  So, this wouldn’t include people who provide services to your company through one of your suppliers.  As an example, if you out-source office cleaning to a 3rd party then the cleaner that comes in everyday is not deemed to be a worker.  All freelancers, temporary staff and casual labour are deemed to be Workers.  There are key pieces of Employment Legislation that applies to people in this group even though they do not have a full employment contract with you.
  • Employee – these individuals are hired directly by your company, have a contract of employment in place and are paid through payroll with tax and national insurance deductions being taken

And what about those who are self-employed?

This is at the heart of the Uber case.  Uber drivers are self-employed and what the case is looking to determine is whether or not they are still Workers and are therefore entitled to Worker rights.  This is important as a key piece of legislation that applies to Workers is the Working Time Directive and this not only controls the number of hours that people are allowed to work but also gives the right to paid holiday.

One important factor to note is that each time an employment tribunal considers an employment status case, the decision is based purely on the individual conditions that exist in the particular employment arrangement. What this means is that employment status depends on a number of factors that need to be considered and a combination of all of them can lead to the conclusion. Effectively, there is no clear definition of the status but it is rather down to a test of different factors that determine what employment status exists.

It is worth noting that HMRC can even consider someone as a self-employed contractor for tax purposes but an employment tribunal can still decide that they are a worker or an employee for employment rights purposes.

What Now?

The best thing for you then is to make sure that you are regularly reviewing the work arrangements that you have in place. We would be happy to support you in this process, so give us a quick call on 0203 319 1649 and one of our consultants will help you navigate this employment law puzzle.