Insights 20.7.18

The changing face of the gig economy continued

Insights 20.07.2018

Following our last guidance note looking at the Gig Economy, the Supreme Court’s unanimous decision to dismiss the appeal in the case of Pimlico Plumbers Ltd and another v Smith is an opportune time to revisit this topic, considering what the implications of the decision means for businesses and evaluating what the future holds.

Please click here for more information on the Gig Economy.

Case Updates:

Pimlico Plumbers Ltd and another v Smith

In June this year, the Supreme Court upheld the previous decision by the Court of Appeal that Mr Smith, who worked for Pimlico Plumbers, qualified as a worker under the Employment Rights Act 1996, the Working Time Regulations 1998 and the Equality Act 2010.  One of the significant factors in this case was the limited ability to appoint another operative to undertake the work on behalf of Mr Smith.  Additionally, the terms of the contract were directed towards an obligation of Mr Smith’s personal performance.

Although the written contract (the Supreme Court, commented that these had been drafted in confusing terms), had features compatible with self-employed status, such as freedom to reject a particular offer of work and the manner in which he undertook the work was not supervised by Pimlico, there were contradictory measures indicating control, such as work attire (Pimlico Plumbers uniform) and covenants restricting working activities following termination.  Overall, the balance was determined to be in favour of the tribunal’s conclusion that Pimlico could not be regarded as a client or customer of Mr Smith.

Aslam and others v Uber BV and others

The next high profile case on the horizon is the Uber case, which is due to be heard by the Court of Appeal on 30th October 2018.  As it stands, the Employment Appeal Tribunal (EAT) has held that Uber drivers are workers rather than self-employed and are entitled to receive the national minimum wage and paid annual leave.  The outcome of the Court of Appeal is greatly anticipated, however, the jury is out (pardon the pun!) on the decision to be reached. Will it provide much needed clarity or will it lead to further questions and ambiguity on the application of employment law?  The recent ruling by the European Court of Justice (ECJ) in December 2017, may indicate that Uber’s forthcoming appeal is less likely to succeed as the ECJ ruled that Uber is a transport company for the purposes of employing drivers, rather than an ‘information society services’ as Uber had positioned.

Considerations for employers

We have previously commented on the importance of understanding the basis of the work relationship with an individual before establishing a commercial arrangement.  There is no ‘one size fits all’ approach and unfortunately this does give a ‘get out of jail card’ – here is a reminder of employment status indicators:

  • Personal service – the individual is obliged to perform work personally and is not permitted to send a substitute to do the work in his or her place.
  • Mutuality of obligation – the employer is obliged to provide work and the individual is obliged to accept the work in return for pay. There must be at least a minimum degree of commitment on both sides.
  • Control – the employer will have control over the way the individual performs the work. For example, in deciding what should be done, the way it should be done and the time and place for performance.    The employer will normally exercise this control by giving directions to the employee and utilising formal disciplinary proceedings where the employee fails to comply.  Skilled or senior level employees may have a high degree of discretion in relation to how tasks are performed, however, the employer will retain a right to give instructions and to also determine matters such as workplace policies, place of work and working times.

Lessons Learnt

Whilst the practical reality of a working arrangement is ultimately the test of self-employed services or worker status, written contracts (service agreements) with conflicting terms could potentially render a self-employed relationship null and void if legally challenged.   Therefore, it is important to have appropriate and pragmatic terms in place which show a clear distinction between the business and the individual offering their relevant services.

In the absence of potential legislative changes (with reference to the draft Bill by the Work and Pensions Committee and the Business, Energy and Industrial Strategy (BEIS) Committee), Case law indicates multi-faceted considerations as the basis of the employment status outcome is reached.  With this in mind, it is important to continually review self-employed working relationships and to seek appropriate advice along the way.

The story is unlikely to end here and no doubt there will be more to report back in the near future…

For more information on the Gig Economy, please click here.

What next?

CBW’s HR Consultants can provide expert guidance on employment status and associated documentation. For further information, please get in touch with the author, Laila Maiwand, using the contact details below.