Are Your Staff Workers or Self-Employed Contractors (and Why it Matters)?

Posted on December 13, 2017

Several high profile employment law cases are progressing through the appeal courts at the moment. They deal with the distinction between staff carrying out their services as a "worker" and those hired as self-employed "independent contractors". The way these cases are being listed for hearing in the appeal courts seems to be significant.

In particular, the appeal courts seem to be distinguishing between those cases that involve workers in the 'gig economy' (such as Uber's drivers) and those cases that relate to workers or people hired as independent contractors in more traditional ways.

What Does the Gig Economy Mean For Its Workers?

In the gig economy, people are paid for each piece of work (or gig) that they carry out. Contrast this with the more traditional working environment in which businesses either employ people as employees to work and then pay them a regular salary or hire people as workers or as self employed contractors.

Whether you are employed as an employee or hired as a worker or as a self-employed contractor matters: employers, workers and contractors each have different rights, duties and obligations to the business to whom they provide their services.

Gig workers are independent contractors who enjoy flexibility and control over their working life. They do not however, have any entitlement to the minimum wage nor redundancy pay nor holiday pay.

Businesses also benefit from the gig economy. For example, they are better able to manage staffing costs in times of reduced demand.

Workers or Independent Contractors?

Uber is currently involved in a dispute with its drivers as to whether they are workers or self-employed (Uber BV -v- Aslam). An employment tribunal held they were self-employed. Uber appealed that decision to the Employment Appeal Tribunal's (EAT) – but their appeal was rejected.

The distinction is important for businesses like Uber in employment law terms. Workers are entitled to various rights such as a pension (subject to the employer having passed the auto-enrolment date) and holiday pay (but not sickness pay). If their status as workers is upheld in the higher courts, Uber will have a much greater staffing bill to pay.

It is probably fair to say that before the EAT decision, most – including many Uber drivers - probably regarded themselves as self-employed.

The appeal decision could affect many in the gig economy including those who work in businesses like Airbnb, Etsy and Deliveroo. No doubt they will be watching the proceedings with interest.

The appeal is due to be heard in 2018 by the Court of Appeal.

Traditional Worker/Self-Employed Cases

Meanwhile, cases relating to whether workers in the more traditional industries are workers or self–employed, continue to crop up in the tribunals. The Pimlico Plumbers case is one example. It is due to be heard by the Supreme Court in February 2018.

To discuss employment law issues relating to the status of workers, contact Susan Mayall on 0161 684 6948.

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.