The issue of employment status has become a hot topic, particularly in recent years with the explosion of the ‘gig economy’ and other evolved models of working.
The question of whether an individual is an ‘employee’, a ‘worker’ or ‘self-employed’ is key because it determines the individual’s legal rights under employment law.
Currently there is no specific test to govern status and each case has to be determined on its own set of facts. Employers therefore turn to case law for guidance.
One of the most publicised cases in recent times is Pimlico Plumbers Ltd and anor v Smith.
Mr Smith was engaged under a contract which described him as an independent contractor and during his time at Pimlico Plumbers (PP) he paid tax on a self-employed basis. He was required to provide a personal service and although he had the ability to send a substitute, it was limited to a certain pool. He could choose the assignments he accepted but was expected to work a minimum number of hours per week. He wore a uniform and drove a company-branded van.
This matter has been ongoing since 2011 when Mr Smith issued proceedings against PP following the termination of his engagement. An employment tribunal ruled that Mr Smith was a worker. PP appealed the decision but both the Employment Appeal Tribunal and Court of Appeal supported the tribunal’s original decision.
On 13 June 2018, the Supreme Court also unanimously confirmed that Mr Smith was indeed a worker and therefore eligible to pursue certain claims against PP, including for unlawful deduction from wages.
The Supreme Court took into consideration various factors including the degree of control PP exercised over Mr Smith and the restrictions on his ability to send a substitute.
Although PP has indicated it will appeal to the European Court of Human Rights, employers will for now have to take note of this decision.
Outcomes do still turn on their facts though and the Government recognises that greater certainty may be required in this area. With this in mind it recently launched a consultation on how to clarify the employment status rules, to include consideration of possible codification.
The consultation closed on 1 June 2018 and the Government are currently reviewing the feedback received and it could result in a change to the way businesses assess status. We are tracking the progression of these changes and will continue to keep you updated on any developments in our blogs.
If you have any queries in relation to the issues mentioned in this blog or require assistance in determining the appropriate legal status of your staff together with advice on the contractual documentation please contact Emma McLoughlin in the Employment Team or your usual Morrisons’ adviser.