So what does this mean?
Last week the Employment Appeal Tribunal (“EAT”) handed down its decision in Uber BV v Aslam upholding the Employment Tribunal’s ruling that Uber drivers are ‘workers’ and thus qualify for workers’ rights.
The EAT agreed with the Tribunal that when the Uber app was switched on Uber drivers were workers.
The tribunal also found that when drivers had the app switched on, they were obliged to be able and willing to accept assignments and were subject to a requirement that they should accept at least 80% of trip requests, and would suffer a penalty if they cancelled a trip once accepted. The EAT considered that these factors were indicative of a worker relationship and inconsistent with the contractual documentation or a suggestion that drivers were in business on their own account.
The EAT found that the Tribunal was entitled to find that Uber was not acting as agent between the drivers and passengers as whilst there may be gaps when the drivers did not have the app switched on and were not workers for Uber they did not consider it was fatal to their status as workers when they did.
It is likely that Uber will appeal this decision so watch this space.
Employee, Worker or Self-Employed; what does this mean and what is the difference?
There are three main types of employment status:
- Worker; and
An individual’s employment rights will depend upon whether they are an employee or worker. The self-employed have very few employment rights.
An employee has more enhanced rights and protection than a worker.
An employee is someone who works under a contract of employment and will carry out the work personally. A contract exists when terms such as pay, annual leave and working hours are agreed. and does not have to be written down to exist. A contract can be implied by the actions and relationship of the parties.
A person may be an employee in employment law but have a different status for tax purposes. You must work out each individual’s status in both employment law and tax law.
All employees are workers however, employees have extra or enhanced employment rights and responsibilities. For example, an employee has the right to statutory sick pay, statutory maternity, paternity, minimum notice periods and protection against unfair dismissal just to name a few. Employees are entitled to a wide range of employment rights.
A worker will also work to the terms within a contract and generally have to carry out the work personally.
Workers could include:
- Casual work;
- Agency workers;
- Freelance work;
- Seasonal work.
A person is generally classed as a ‘worker’ if:
- They have a contract or other arrangement to do work or services personally for a reward (the contract does not have to be written);
- Their reward is for money or a benefit in kind;
- They only have a limited right to send someone else to do the work;
- They are not doing the work as part of their own limited company in an arrangement where the ‘employer’ is actually a customer or client.
Workers are entitled to some employment rights, for example, the National Minimum Wage/Living Wage, holiday pay, protection against unlawful deduction from wages and protection against unlawful discrimination.
A self-employed person will run their own business and take responsibility for the success or failure of the business. Self-employed people are more likely to be contracted to provide service for a client. They will not be paid through PAYE and do not have the same employment rights and responsibilities as employees or workers. Employment law does not cover self-employed people in most cases because they are their own boss. However, if a person is self-employed:
- They still have protection for health and safety on a Client’s premises;
- In some cases, will be protected against discrimination;
- Will have their rights and responsibilities set out in the terms of the contract with their Client.
Generally speaking, an individual is likely to be deemed as self-employed and will not have the rights of an employee if they are exempt from PAYE and most of the following are also true:
- They put in bids or give quotes to get work;
- Are not under direct supervision when working;
- Submit invoices for the work they have done;
- Are responsible for paying their own National Insurance and Tax;
- They do not get holiday or sick pay when they are not working;
- They operate under a contract for services or consultancy agreement that uses terms like ‘self-employed’, ‘consultant’ or an ‘independent contractor’.
Self-employed individuals are exempt from PAYE if most of the following are true:
- They are in business for themselves, are responsible for the success or failure of their business and can make a loss or a profit;
- Can decide what work they do and when, where or how to do it;
- They can hire someone else to do the work;
- Are responsible for fixing any unsatisfactory work in their own time;
- Their employer agrees a fixed price for their work – it does not depend on how long the job takes to finish;
- Their own money is used to buy business assets, cover running costs, and provide tools and equipment for their work;
- They can work for more than one client.
Employee or worker?
The Employment Tribunal will look at the relationship the individual has with the Company or Client. In determining whether the individual is an employee or not the Tribunal looks at the following factors:
- Who controls the work the individual undertakes;
- Who sets their shifts/hours of work;
- The degree of financial risk involved;
- How they are paid;
- Whether they are paid when absent due to holidays or sickness;
- Who is responsible for the payment of tax/national insurance;
- Who provides the tools for work to be carried out;
- What happens when the individual is off sick/takes holidays; and
- How often they work for you.
If you have any questions or you need assistance in determining your or your staff’s employment status please do not hesitate to contact us.