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Employment status – the saga continues

Author: Sarah Naylor

The media spotlight (in terms of employment law!) has firmly been upon the so called “gig” economy in light of the recent court decision on whether Uber drivers are employees or workers.

The latest case in the saga was that of Mr Gary Smith, a plumber who was successful in his legal challenge against Pimlico Plumbers in which the Court of Appeal confirmed that he was entitled to workers’ rights although he was technically self-employed.

That decision was the latest to side with workers and involved the highest court considering such a case to date.

In Mr Smith’s case, the decision before the Tribunal was to determine his status – was he a self-employed contractor or was he a worker? Mr Smith was VAT registered and paid tax on a self-employed basis, but he worked solely for Pimlico Plumbers for six years. Mr Smith in reality said that he was “tightly controlled” by Pimlico and was unable to work for anyone else.

Although this was a fact sensitive case, as many cases of this nature tend to be, it is nevertheless likely to be a leading case on employment status in the years to come. In it’s judgment, the Court of Appeal gave a clear summary of the principles for the “personal service aspect of the employment status test – something that was quite persuasive in this particular case.

However, one of the Court of Appeal judges did give a word of caution when ruling in Mr Smith’s case:-

“Although employment lawyers will inevitably be interested in this case – the question of when a relationship is genuinely casual being a very live one at present – they should be careful about trying to draw any very general conclusions from it,” said Lord Justice Underhill.

This seems to say that although this case can currently be regarded as an authority on this issue, we shouldn’t place too high a reliance on it because the issue is being investigated further and things could change yet again before long.

Indeed, the government has commissioned four experts to look into the issue of workers’ rights in the “gig” economy. The review is intended to address questions of job security, pension, holidays, parental leave rights and also “employer freedoms and obligations”. The government clearly recognises the importance of our employment rules keeping up to date with new ways of working, so the review will have a focus on modern day working practices.

Businesses could be forgiven for now feeling some confusion and apprehension about engaging people on an apparent self-employed basis, as the risk of those people being able to attract workers right in reality is high. It is more important than ever for businesses to take care when constructing contracts of this nature, and taking legal advice on employment relationships, appropriate contracts and treatment of workers is essential.

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