A landmark employment tribunal ruling has thrown the status of thousands of self-employed workers into sharp focus.
An Employment Tribunal has decided that two drivers from the private hire cab service Uber have the right to be classed as ‘workers’ rather than as ‘self-employed’ – entitling them to benefits including the minimum wage and holiday pay.
Uber immediately appealed the ruling which could have a massive impact on the so-called ‘gig’ economy – a growing sector of on-demand services including transportation, food, and cleaning, often powered by smartphone apps.
Depending on the appeal, this ruling could affect all of Uber’s 40,000 drivers in the UK. But its influence could be far more wide-ranging affecting many small and medium-sized businesses.
Research by Citizens Advice in 2015 suggested that 460,000 workers in the UK may be ‘bogusly self-employed’. That works out at 10 per cent of the country’s 4.8 million self-employed workers today.
So, here’s a simple Q&A to help you judge if someone who works for you should be classed as self-employed or employed?
Q. Do you tell the person what to do and how to do it?
A. If the answer is yes, even if you leave them alone to actually do the work, then they could be classed by an employment tribunal as your employee.
Q. Do you provide the work for them to do?
A. If you control the work to be done and provide it for them, they will be classed as your employee. On the other hand, if they have to go out and find their own work, then they could be seen by a tribunal as self-employed.
Q. How is the worker paid?
A. If you pay them a regular amount at regular intervals, that could indicate they are your employee. If they are being paid per job done, then it could suggest they are self-employed.
Q. What happens is they are sick?
A. If the individual has to find someone else, such as a sub-contractor or a friend, to do the work if they are unable for some reason, this suggests they are self-employed. If it is up to the company to find someone else to do the work, this could suggest they are your employee.
Q. Who provides the tools and material to do the work?
A. If the answer is you, with the individual responsible for supplying only a few of their own tools, then they are likely to be classed as your employee. Please consider also that tools doesn’t just apply to machinery but also electronic equipment, e.g. laptop or mobile phone.
Q. Who is responsible for health and safety in the workplace?
A. Whatever the employment status, the employer is responsible for the individual’s health and safety in the workplace.
In Uber’s case, the tribunal found the firm exercised a level of control over its drivers which meant they could not be classed as self-employed.
It also said that Uber interviews and recruits drivers, however, the drivers have no opportunities to grow their own business, other than by spending more hours in their cars, and Uber controls key information such as the passenger’s surname and contact details which the drivers only find out about when they have accepted the job. Plus, the rating system used by passengers to help Uber monitor how the drivers are performing is also indicative of an employer-employee relationship.
For more information the HMRC has a useful tool- The Employment Status Indicator (ESI) tool which enables a company to check the employment status of an individual or group of workers – that is whether they are employed or self-employed for tax, National Insurance contributions (NICs) or VAT purposes.
But, if you have any doubts and want advice on this issue, contact Ansa HR for guidance on 01270 446 444 – we’d be happy to help.