Employed or Self Employed… The Age-Old Debate Rages On

02 October 2017

There have been a number of court cases recently concerning the importance of distinguishing the employment status of a worker. Where such cases are taken to the courts and the individual has been incorrectly treated as a subcontractor and, as a result, not received entitlement to basic employment rights, this can result in large penalties being charged to the business.

A present court case that has highlighted the importance of establishing an individual’s employment status at the outset of engagement, is that of Pimlico Plumbers and Charlie Mullins v Gary Smith. In this case, the individual is arguing that he has been incorrectly treated as a subcontractor throughout his service to the business. In considering whether the individual is employed or self-employed, the case will look at factors such as the requirement for the individual to wear a uniform, whether he drives a van displaying the company’s logo, and the level of control regarding his work hours. Should the final verdict of this case be that the individual is in fact an employee, the business will be required to provide basic employment rights such as the National Minimum Wage and holiday entitlement, which to date, he has yet to receive.

In the case of Mr C. Gascoigne V Addison Lee, Addison Lee, a taxi and courier service, failed to provide basic worker rights to Gascoigne, a cycle courier. Gascoigne brought the case to the Central London Employment Tribunal, who ruled that Addison Lee unlawfully failed to provide the courier with a week’s holiday pay. The judge considered factors such as the basis Gascoigne was paid and Gascoigne’s lack of negotiating power over the terms of his contract at the outset.

The judge ruling the Addison Lee case believes contradictory wording used in such workers contracts are written in a manner designed to deter individuals from challenging their employment status. With the rapidly expanding ‘gig economy’, the grey area between what classes an individual as employed or self-employed prevails. Similar rulings have been drawn by the Employment Tribunal in cases involving Uber and delivery companies, also concluding that their drivers are entitled to holiday pay and the national minimum wage.

At present, there remains to be no legislation that presents distinct rules on the classification of a worker, in order to categorize an individual, an overall picture of the factors present and those absent has to be drawn. It is important to note that responsibility for determining whether an individual is employed or self-employed falls with the business who engage the service of the worker. Alongside the employment rights issues, also comes the risk of the wrong value of taxes and NIC’s being paid, which would ultimately be a cost of the engaging business if found to be incorrect.

If you would like any further information or assistance in determining worker’s employment status, please do not hesitate to contact Charlotte Stewart (charlotte.stewart@aab.uk) or your usual AAB contact. 

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