OVER 40,000 taxi drivers in the UK may now be entitled to be paid minimum wage and sick pay, following a landmark employment tribunal ruling.
The decision sets a precedent for other workers in the "gig economy" where temporary positions are commonplace.
On-demand working, driven by US technology-based platforms such as Uber and Etsy, has led to the emergence of the so-called "gig economy" where people are paid piecemeal for services, without any employment rights.
However, this attempt at avoiding employment rights is being challenged.
Drivers for the popular taxi app may now have the right to be classed as workers rather than being self-employed, following the landmark employment ruling – potentially giving them entitlement to holiday pay, paid rest breaks and the national minimum wage.
Determining the status of an employee/worker/self employed contractor is crucial, as San Francisco-based Uber has discovered.
For UK employers, there are three main categories of status to consider:
- Employee – most people in work are employees, with a contract of employment which includes agreed terms and conditions.
- Self employed – there is no contract of employment but instead a contract to provide services for a fee.
- Worker – a broader category than employee, workers include freelancers, casual short term workers and agency workers.
What is the difference and why does it matter?
Pay
Employees and workers are entitled to receive the national minimum wage. If you don't pay NMW when entitled this could result not only in backdated claims for wages, but fines up to £20,000 per underpaid employee/worker.
Holidays
Employees and workers are entitled to holidays and rest breaks in accordance with the working time regulations. Claims for unpaid holidays can be backdated for up to two years.
Sick pay
Employees and workers are entitled to receive statutory sick pay.
Work
Employees are entitled to be provided with work and are expected to accept work. However, workers and self-employed may not be entitled to be offered or have any obligation to accept work.
Notice
Only employees are entitled to receive statutory notice, but beware of notice provisions in contracts for workers and self-employed.
Redundancy
Only employees can claim redundancy pay.
Unfair dismissal
Only employees can claim unfair dismissal.
Breach of contract
Employees, self-employed and workers can all make breach of contract claims. Be aware that while the contract may indicate a particular employee status, a tribunal would consider what happens in practice to determine the reality of the situation.
Ultimately employee status depends on the individual circumstances and would be for a tribunal to decide based on what the person does in practice.
Rather than risk having to debate employee status at a tribunal like Uber, ask yourself the following questions:
- What of the obligations listed above do you consider acceptable costs and responsibilities for your business?
- What are your expectations of your staff?
Employee status is not clear cut.
Whether the work is a "gig" or employment is important when it comes to employer obligations and employee or worker rights.
It depends on various elements and while you may believe your staff are one thing, as Uber has discovered, they may end up being something quite different.