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GIG

Independent Contractors or Workers?

There have been a string of cases over the last year concerned with the “Gig” Economy. So what is it? The “Gig” Economy is, essentially, characterised by someone who, rather than getting a regular wage, is paid per “gig”, such as a delivery, a car journey or a plumbing job. Businesses have traditionally sought to assert that those people engaged on this sort of basis are independent contractors as opposed to workers or employees. Increasingly, the Employment Tribunal has seen significant challenges to that status.

 

If truly independent, a contractor has no employment rights in relation to paid time off sick, paid holiday, receipt of the National Minimum Wage, rest breaks and protection against unfair dismissal and no right to redundancy payments. A Worker (defined in section 230 (3) of the Employment Rights Act 1996 (“ERA”), conversely enjoys some minimum employment rights including but not limited to, holiday pay, the right to National Minimum Wage, minimum rest breaks, the right not to be discriminated against and the right not to be unfavourably treated for whistleblowing.

Uber, Deliveroo, City Sprint and Pimlico Plumbers have all been under fire over the course of the last 12 months. The most recent, Pimlico Plumbers, was the subject of a Supreme Court ruling only last month. Gary Smith, a heating engineer, from Kent issued proceedings against Pimlico in the Employment Tribunal following his dismissal which, on his case, was because he had asked for a reduced working week after he had suffered a heart attack in 2011. Pimlico lost at each stage of the process but determined to appeal to the highest level in England and Wales, where they lost for a fourth time. The distinctive factors, in Lord Wilson’s Judgment, were the imposition of “fierce conditions on when and how much it [Pimlico] paid to him [Smith], which were described at one point as his wages; and to restrict his ability to compete with it for plumbing work following the termination of their relationship”. Whilst the Court recognised there were some aspects of the arrangement between Smith and Pimlico which resembled self-employment, these were outweighed by factors which swung in the favour of his status as a “worker” which included the requirement that he wear a branded uniform, he drove a branded van which was tracked and he carried an identity card.

There have been many cases on the interpretation of arrangements between businesses and individuals over the years most of which turn on their own facts with the only uniform message being that there is no universal key to unlock the words of the ERA. Although not a landmark case, perhaps save for Pimlico’s owner’s tenacious defence of his position even now threatening a reference to the European Court of Human Rights, the Pimlico case does seem to close a loophole in determining whether an individual is an independent contractor or a worker and that relates to the right to “substitution”. Previous cases (Dewhurst v CitySprint UK Limited ET/2202512/2016 and IWGB v Deliveroo TUR1/985 (2016) in particular) have suggested that where the contract between the parties permits substitution (i.e the individual can allow someone else to carry out the work on their behalf if they do not want to or are unable to) and such right is not a “sham” then this was good evidence of a contracting relationship. Pimlico has determined that the fact of substitution cannot define an arrangement as one of independent contracting provided that the concept of “personal service” remains a fundamental aspect of the relationship.

The Government has indicated an interest in this area as the Gig economy is set to cost the Treasury £3.5bn in reduced tax income in 2020 – 2021. Businesses might expect a clamp down from HMRC as to classification of the status of those they engage in order to improve tax revenue and the Unions remain heavily involved in lobbying government for further clarification in Statute form.

If you are facing a challenge involving workers and/or self-employment contractors or want further guidance in this area, please contact Emma Lee of Jarmans Solicitors on 01795 472291 or email me at [email protected].

 A Supplymybusiness.co.uk blog