David Grech: Employees or self employed, that is the question?

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There has been a lot of talk recently about employment status but the recent Uber case now gives us some guidance, however this is only an employment judgement at this stage. Uber has said it will appeal, so no legal precedent has been set yet.

What does this mean to me as an employer? What is meant by ’employment status’?  This term is the arrangement under which an individual is engaged to work for an employer. There are three main categories:

  • Employees, that you directly hire
  • Workers, those that may be casual, agency or freelance workers, performing services personally for your company or working on a seasonal basis
  • Self-employed, such as contractors.

So why should I concern myself about employment status?

Employees are covered by a full range of statutory employment rights, such as the right not to be unfairly dismissed and redundancy pay.

Workers are also entitled to some rights, such as paid holiday and National Minimum Wage but the dividing line between the two can often be quite blurred.

If you employ staff you have to meet your statutory obligations e.g. holiday pay, tax and NI and you are vicariously liable for the negligent acts or omissions of your staff in the course of their employment.

This month an Employment Tribunal has held in the case of Aslam v Uber that drivers engaged by Uber were not self-employed contractors, but fell squarely within the legal definition of “worker” under the Employment Rights Act 1996, the Working Time Regulations 1998 and the National Minimum Wage Act 1998.

This means they are legally entitled to a minimum wage and paid holidays. In contrast to self-employed who are not entitled to any employment rights. Uber has consistently stated that these drivers were not workers but were self-employed. However analysis of Uber’s operation, statements and systems showed that the drivers were workers with some employment rights.  

What should I think about then if I employ staff?  

Think about how you engage staff, and categorise them correctly, to avoid expensive risks later. A worker who has not been considered as such, may have claims to holiday pay, minimum wage and pension contributions that you have not taken into account.

Whilst you can ensure you have the right documents with the correct terminology, upon analysis the relationship may be determined differently to the characterisation you have given it.