Ferdinand Lovett: Workplace pensions and the gig economy

Classifying an individual as a worker instead of a self-employed contractor, as in the recent Uber and Citysprint tribunal cases, really matters from a pensions perspective.

This is because the definition of ‘worker’ in the pensions auto-enrolment legislation is almost identical to the one used in employment rights legislation, with little scope to argue that being a worker for the purposes of employment rights generally should not cross over into the world of workplace pensions.

The two recent cases feel like very new territory. But the question of whether someone is engaged under a short-term worker’s contract or is genuinely self-employed, is a classic legal issue that has become much more relevant since the introduction of the automatic-enrolment duties in 2012, which attribute workplace pension rights to anyone who is a worker.

A sensible starting point for employers involved in the gig economy would be to not duck pensions or assume they are eligible for a carve-out from the law. Having individuals with worker status means the employers need to think about pensions. The extent of the pensions obligations the employers then owe to a worker will depend upon their age and earnings.

There are only limited exemptions in the auto-enrolment legislation and, in fact, one of the only times an employer is allowed not to auto-enrol a worker otherwise eligible for a pension is where he or she is a member of a limited liability partnership (LLP). This exemption was introduced following the 2014 Supreme Court case of Clyde and Co., which decided that members of an LLP could be workers for employment law purposes.

But gig economy cases are different and the chances of an exemption in this area are highly unlikely. Arguably, the type of individuals covered by the Uber and Citysprint cases, and, no doubt, more like them in the future, are right within the sights of the government, in terms of the segment of the population intended to benefit from barrier-free access to workplace savings. It is very likely that the Pensions Regulator will take an interest in how this area of law develops.

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Ferdinand Lovett is senior associate at Sackers