Melanie Stancliffe: The legal landscape of reclassifying workers provides extensive implications

Melanie Stancliffe: The legal landscape of reclassifying workers provides extensive implications

Were it not for the right-sizing of businesses, all eyes would be focussed on the impending Supreme Court’s decision whether Uber’s drivers should still have been classed as workers. The Uber decisions have changed the legal landscape and afforded protection to many off-payroll workers, which the businesses engaging them had not intended to provide.

The implications for businesses are extensive. It means increased cost of funding 3% pension contributions, 5.6 weeks’ paid annual leave and a minimum hourly wage of £8.72, increased administration in providing statements of terms and running payroll, increased protections like discrimination and whistle-blowing which workers enjoy, and the risk that HM Revenue and Customs will also regard the individual should be on payroll and national insurance contributions paid for them.

There is a chance that Uber’s staff will be recognised as genuinely self-employed before the Supreme Court, but it is a remote chance. The Court of Appeal, one level below, roundly dismissed Uber’s appeal, finding the drivers were workers and that the independent contractor contracts in place must be disregarded as they did not reflect how the relationship worked in practice.

The last Uber decision relied on the case that started what has become an established trend (Autoclenz Ltd v Belcher [2011] UKSC 41, [2011] 4 All E.R. 745, [2011] 7 WLUK 790), which decided the genuine nature of the relationship is key and tribunals must look past the contractual arrangements and complex structures between employers to the reality. Tribunals will look at all of the circumstances of the working relationship before deciding if the person has the rights of an employee, a worker or a self-employed individual.

Like working relationships, the law in this area evolves and the direction of travel is protecting individuals and placing higher demands on businesses. Clarity is needed when hiring, onboarding and promoting to ensure that type of relationship does not change. Covid-19 (Coronavirus) has challenged acquired thinking; working from home no longer suggests a lack of control and lack of employment. The next Uber decision is unlikely to push back the tide of increasing protection for individuals. When business sustainability is under pressure and the extension of IR35 on the horizon, it is time to audit a workforce’s status and ensure reorganisations now do not translate into future claims.

Melanie Stancliffe is a partner at Cripps Pemberton Greenish.