Matthew Smith: What have recent legal cases revealed about employment status?


Does it matter if someone is called an ’employee’ or a ‘worker’ or ‘self-employed’?

The simple answer is yes, provided that label reflects the reality of the working relationship. An individual’s status determines what workplace rights, if any, they have and it will also have implications for tax and national insurance contributions.

Employees have comprehensive rights, including the right to claim unfair dismissal and statutory redundancy payments. Although workers have fewer rights than employees, both groups are entitled to, for example, paid annual leave, the national minimum wage and the right not to be discriminated against. Self-employed contractors on the other hand are in business on their own account without any of the rights of employees or workers, although in certain cases they may have the protection of the discrimination legislation.

Litigation about employment status has become increasingly high-profile with the growth of the gig economy involving organisations as diverse as Uber, Deliveroo and Pimlico Plumbers. Significantly, the cases range all the way from the initial Employment Tribunal (ET) proceedings right through to the Supreme Court.

Although the test for deciding employment status is complex and each case turns on its own facts, in the recent cases, all the individuals engaged were held to be workers and not self-employed. Some key features addressed by the courts included personal service, which states that the services performed had to be carried out personally with little or no right to use someone else as a substitute, integration, where if the individual was well-integrated in the organisation this made it less likely that they were a client or customer of it, and control, for example if considerable control was exerted over individuals and included the requirement to wear a uniform, drive a branded van, be available at certain times and be subject to the instructions of the control room or logged into a tracking system.

The courts also addressed the issue of contractual documentation, where often the documentation did not reflect the reality of the working arrangements compared to an analysis of the day-to-day arrangements, so someone called ‘self-employed’ was in fact a worker.

With Uber’s appeal to the Court of Appeal due to be heard on 30 October 2018, we can expect all these issues to be considered again soon.

Matthew Smith is a partner in the employment law team at Blake Morgan