Looking beyond the label
The gig economy has been described as a five million-strong ‘labour market characterised by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs’.By Victoria Mitchell, associate partner and head of employment law and HR at Farleys Solicitors.Individuals get paid for the ‘gigs’ they perform, such as parcel delivery, rather than a regular wage.
This is viewed by some as a working environment offering flexibility and by others as exploitation with very little workplace protection.Recent cases including the Uber taxi drivers, City Sprint parcel couriers, Deliveroo takeaway couriers and, most recently, Pimlico Plumbers has highlighted the employment status of selfemployed individuals (or independent contractors) in the gig economy, and marked a movement away from this status to classification as ‘workers’.
The law governing employment status looks beyond the label applied, whether this is self-employed, a worker, or an employee, and focuses on the reality of the relationship.Key components of an assessment and decision by an Employment Tribunal on employment status include mutuality of obligations, personal service and control – all of which must be present for an individual to be classed as an employee.
In Pimlico Plumbers & Charlie Mullins v Gary Smith, the Court of Appeal agreed with the original Employment Tribunal decision that found the self-employed plumber was actually a worker.As a result of being given the status of workers, these self-employed individuals are now entitled to more rights than if they had been deemed self-employed. These include the national minimum wage, paid holiday, rest breaks, not to be treated detrimentally, and the ability to bring discrimination and whistleblowing claims.
Independent contractors are now starting to build up a number of workplace protections and the lines between the three categories of self-employed, worker, and employee are becoming increasingly blurred. Categorising someone as an independent contractor when in reality they are a worker could be very costly and result in significant tax liabilities and penalties – including criminal sanctions – for failing to comply with auto-enrolment obligations and Employment Tribunal claims.
Top tips for employers
- Take account of a changing workforce and economy
- Review staffing structures
- Focus particular attention on those labelled as freelance and self-employed staff
- Take advice as to the status of staff and whether or not your business has any written terms governing these relationships and if so whether they afford appropriate protection.