in-depth

Technical update - November 2017

Andrew Macmillan

Self-employed workers

Issue

Historically, the ‘employer and employee’ relationship had been regarded as the norm. However, in the last few years there has been a huge growth in the number of businesses contracting with individuals as ‘self-employed’. Whether a business should be able to cut costs and avoid employment liabilities by adopting such an operating model has become a highly contested issue, and the recent Uber B.V. and Others v Mr Y Aslam and others is an important test case for the whole ‘gig economy’.

Facts

Mr Aslam and other taxi drivers had entered into a contract with Uber to use their app. They were given a zone in which they would be allowed to log into the app if they wanted to accept jobs. They could decide not to accept the offer of jobs but if they did this, often they would lose access to the app. The drivers signed agreements that stated they were self-employed but brought claims that they were entitled to national minimum wage and holiday pay rights.

Decision

It was held that the reality of the situation was that the taxi drivers formed a pool of ‘workers’ on which Uber depended to provide a private hire vehicle service. Despite the labels used in the documentation, the arrangements that had been put in place meant that the drivers were ‘workers’ rather than running their own business, which meant that they had been entitled to national minimum wage and paid holiday.

Action

This decision shows that the courts will look behind the contractual labels given to the working relationship to decide whether they reflect the reality of the situation. Businesses that contract with individuals on the basis that they are self-employed will need to review their work arrangements to assess if they could also have worker rights. This will depend on a number of factors, including mutuality of obligations, the level of control exercised and the requirement for personal service.

 

 

Substituting workers

Issue

Employment status is not just a key issue for establishing whether individual’s can benefit from worker rights, it can also be a factor in deciding whether there is any collective right to representation. The case of Independent Workers Union of Great Britain v RooFoods Ltd (t/a Deliveroo) came before the Central Arbitration Committee (CAC), concerning the question of employment status where a union was being refused the right to represent its members in the workplace.

Facts

Deliveroo is an ‘app-based’ business. Individuals apply and are selected for the job, which is to deliver food to customers who order through the app. The contracts state that they are independent contractors and they have the right to send along someone else to carry out the delivery. The union requested recognition in respect of a number of delivery riders in the Camden zone. However it was disputed that the application could be accepted as the individuals – despite being union members – were not workers within the scope of the legislation.

Decision

The CAC found that the express contractual provision in which Deliveroo gave the delivery riders the right to substitute themselves both before and after they have accepted a particular job was fatal to the union submissions that they were workers. It considered that the evidence showed this was not just a paper right of substitution but was genuine and reflected what happened in practice. Substitution did take place and Deliveroo was ‘comfortable with it’.

Action

The decision shows that not every engagement will provide the individual with ‘worker’ rights. The statutory provisions emphasise that in order to be a worker, the individual has to agree to carry out the work personally. A genuine ability to delegate the work to others will generally mean the individual will not fall within the definition. However, where there is evidence that the right to provide a substitute is limited, conditional on approval or never exercised, it may not be sufficient to defeat the work status argument.

 

 

Rising cost of getting work status wrong

Issue

The right to take paid holiday has been at the centre of several recent high profile cases regarding employment status. Taxi drivers, plumbers and couriers have all successfully argued that despite being labelled ‘self-employed’, they also have employment rights, since they fall within the statutory definition of being a ‘worker’. In the case of King v The Sash Window Workshop Ltd, the key issue was what compensation would be due if no holidays had ever been granted during the contract.

Facts

Mr King was self-employed and worked on a commission-only basis for Sash Windows, from June 1999 until 6 October 2012. During this time he refused an offer to be on the books as an employee. Unsurprisingly, being ‘self-employed’ Mr King was never paid for holidays or sickness absence. However when he retired, Mr King brought claims for accrued but untaken holiday together with pay for holidays he had taken each year throughout his 13-year engagement.

Decision

The European Court of Justice has held that in order to comply with the EU Working Time Directive, where workers are not provided with a facility to take paid annual leave, they have a right to be paid compensation. This should be without having to show that they have taken unpaid leave and the right to compensation should carry over, continuing to accrue until the end of their engagement, or to the point they are provided with a facility for leave to be taken.

Action

Up until this point, the recovery of compensation in respect of unpaid holiday has been subject to a two-year limitation and a further restriction where there was a gap of more than three months between holidays being taken. Following this decision where no facility for holiday has been provided, these limitations are under threat. Contractual arrangements should be reviewed and if it appears that the self-employed individual may also qualify as a worker, the inclusion of a holiday pay facility should be considered to limit the potential for historic liability.

 

 

On the seventh day

Issue

The EU Working Time Directive provides a right to weekly rest periods. This has been implemented in the UK under the Working Time Regulations 1998 (WTR), under which employers must provide workers with either one day’s rest in a seven day period, or two day’s rest in a fourteen day period. The issue that arose in the Portuguese case of Maio Marques da Rosa v Varzim Sol – Turismo, Jogo e Animacao SA was whether that rest had to be granted on the seventh day of the reference period.

Facts

Mr Maio Marques da Rosa was employed at a casino, which was open seven days a week. Following the introduction of a rotating work schedule for a period of time, Mr Maio Marques da Rosa occasionally worked for seven consecutive days. After his employment came to an end he brought claims that he had been denied his weekly rest, which he submitted must be granted at the latest on the seventh day, following six consecutive working days, under the EU Working Time Directive.

Decision

The European Court of Justice has held that the EU Working Time Directive did not require weekly rest to be granted on the seventh day following six consecutive working days. The employer would comply with its legal obligations by providing the worker with a rest day on any day of the week. Under the Directive, all that Member States had to ensure was that national legislation gave rights to ensure that every worker enjoyed a minimum uninterrupted rest period of 24 hours during any seven-day period.

Action

Whilst this decision does provide some reassurance, in that there are at least no strict requirements in relation to when to grant weekly rest, it is important that the health and safety of the worker is taken into consideration. So even if it might be possible, where the reference period is 14 days, to grant a 48-hour rest period at the beginning of one such period and at the end of the following period, any work pattern that would place a worker’s health at risk should be avoided.

 

 

Proving a right to work

Issue

A crackdown on illegal working and the threat of £20,000 fines for each individual breach has led to some businesses requiring that even employees with long service provide proof that they are entitled to work in the UK. The issue in the recent case of Baker v Abellio London Ltd was whether dismissal for failing to provide that documentation could be found to be fair, on the grounds that their continued employment would be illegal.

Facts

Mr Baker, a Jamaican national, was employed as a bus driver. He had the right to live and work in the UK and did not require a visa. The employer decided to carry out an audit to check that all employees had the correct documentation to show their right to work in the UK. When Mr Baker was unable to produce that documentation, he was suspended without pay and later dismissed on the grounds that the employer could not continue to employ him without breaching immigration laws.

Decision

It was held that the continued employment of Mr Baker would not have been illegal. The failure to produce documentation to show an entitlement to work in the UK does not make the employment illegal. The purpose of asking for documentation to show proof of entitlement was to provide the employer with a defence to the allegation that it had employed an illegal worker. However, Mr Baker was entitled to work in the UK. It was therefore possible that his dismissal had been unfair and that his unpaid suspension had been unlawful.

Action

Clearly it will be important to ask for documentation to establish that a worker is legally entitled to work in the UK. This decision should not put off employers from checking that the employee has the required documentation. However, where it is known that the employee has the right to work in the UK, their failure to produce the documents requested should not result in their wages being stopped or lead automatically to their dismissal.

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Andrew Macmillan

Andrew Macmillan

Partner

Andrew is a specialist employment lawyer, with a particular focus on contentious work such as reorganisations, redundancies, employment aspects of insolvency, executive severance, employment relations issues and employment tribunal litigation.