This has been a very hot topic recently and we have been overloaded with articles about what the “workers” versus “self-employed” issues/rights means, so now the ruling has been made HR Revolution discuss what this means for businesses going forward.
The Employment Appeals Tribunal ruled on Friday that Uber’s drivers qualify as workers, giving drivers rights such as the minimum wage and holiday pay, resulting in potentially damaging the way the company operates. Currently the average hourly rate minus fees, petrol and expenses may mean an Uber driver is not earning the minimum wage.
Although Uber argued that their drivers have the freedom to choose when and where they work, the EAT ruled that drivers were effectively working for Uber while the app was switched on, and were not able to make themselves available to other operators as Uber had claimed. In addition, the way Uber limits driver contact with customers, the language it uses when recruiting drivers and the way it treats those drivers who refuse a fare, resulted in the EAT concluding that Uber exerts control over the drivers, meaning they are to be deemed as workers as opposed to being self-employed and are therefore entitled to worker rights.
Conversely in the case brought by the Independent Workers Union of Great Britain, Deliveroo riders have been ruled “self-employed” by the labour law body the Central Arbitration Committee (CAC). This further highlights the complexity of determining the employment status and why it is imperative care is taken when considering whether the individual has worker rights including holiday pay and minimum wage.
The key to this case was that in the contract between Deliveroo and the riders; riders had the freedom to substitute the services to a “mate” both before and after they had accepted a particular job if they wished – allowing other riders to take their place on a job. The CAC found that the right to substitution was genuine in day to day practice and therefore found the riders be self-employed. To further support Deliveroo’s case, the new terms also stated that riders did not have to wear branded clothing.
Both of these decisions have been based on whether there is “control” from the employer to the employee and in the case of Deliveroo the lack of control meant the balance was tipped as the riders having self-employed status.
Riders enjoy being their own boss – having the freedom to choose when and where they work, and riding with other delivery companies at the same time. In practical terms, this implies they are genuinely self-employed.
What could these rulings mean for your business?
Both of these rulings although contradictory, have significant implications for the gig economy in particular. It also clearly demonstrates that there is still a lot of ambiguity and confusion around employment status, which is expected to be given clarity by the government by the end of the year.
The outcomes of both these cases emphasises the importance of ensuring you are giving those entitled to employment rights, just that and also ensuring any contractors are complying with any IR35 rules. It means care and consideration should be exercised by both the employer and employee when entering into an independent contractor agreement on a self-employed basis.
Any business should take guidance from both of these cases as they demonstrate how important it is that your employee status is. Make sure the use of self-employed contractors are being used correctly within your business and not just as a label to get around the rules. With the number of self-employed contractors increasing significantly, both of these rulings are likely to be significant for employment law in the UK.
The lesson from both of these cases lies around the control identified in the terms and conditions of an independent contractor agreement. Although this doesn’t set a new precedent as all cases will be judged on their own merits, the control you exert over anyone self-employed within your business should be carefully considered to avoid any similar claims.
Deciding on the appropriate employment status can be difficult for many companies. If you have concerns regarding this, HR Revolution are here to help, get in touch with one of our consultants who can offer you a free consultation to ensure that you are compliant.
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