The new thresholds will apply to all contracts let and procurements that begin after 1 January 2020.
The issue of worker status continues to make its way into the headlines, fuelling uncertainty about who is self-employed, who is a worker and (most relevant) who has the corresponding employment rights.
As well as the Taylor review, there have been significant cases in the Employment Appeal Tribunal (“EAT”) and Supreme Court relating to worker status.
Navigating through the latest case law and commentary can be taxing, so we give a summary of two main recent cases and our comments on the current position.
Addison Lee v Gascoigne
Does something need to be said here about why Mr G was bringing a claim against Addison Lee? Is it because he wants holiday pay?
Mr G worked as a cycle courier for Addison Lee. His contract stated that he was an “independent contractor” and even went so far as to state that should he bring a claim against Addison Lee based on worker status, he would indemnify Addison Lee against any liability resulting from that claim.
Mr G showed that he was “available and willing” to work by logging into the Addison Lee app. Upon allocation of a job, he generally could not decline it. Addison Lee then determined the rate of pay, and there was no possibility of negotiating a higher rate. He also had to pass a criminal records check, so his personal performance was required.
Mr G argued that he was a worker rather than a self-employed contractor and the Employment Tribunal agreed with him. Addison Lee appealed.
Employment Appeal Tribunal decision
The Employment Tribunal and the EAT considered what happened in practice rather than the terms of any written contract. The EAT agreed with the Employment Tribunal that Mr G was a worker and not genuinely self-employed. He was not operating his own business. Consequently, Mr G would be entitled to statutory holiday pay.
Pimlico Plumbers Ltd and Mullins v Smith
Mr S worked as a plumber for Pimlico Plumbers (“PP”). The contract between Mr S and PP stated that he was an independent contractor in business on his own account. There was also a provision stating that Mr S should work a minimum of 40 hours per week, with a limited right to swap an assignment with other PP plumbers.
The question was, whether Mr S was a worker or self-employed contractor. The Employment Tribunal held that he was a worker and the EAT along with the Court of Appeal agreed. PP appealed to the Supreme Court.
Supreme Court decision
The Supreme Court upheld the decision of the Court of Appeal and agreed that Mr S was a worker. The key points were:
- Mr S’s personal service to PP was required. His contract used words such as “your skills” and did not reference his right to substitute another person.
- PP was not Mr S’s client/customer. Some aspects taken into account to reach this conclusion were that Mr S had a PP branded van, uniform and carried an ID card. Also, Mr S was subject to restrictive covenants, and his contract referred to “wages” and “gross misconduct”.
Consequently, Mr S would be eligible to bring a discrimination claim and a claim for statutory holiday pay.
Despite the CEO of PP being quoted giving a warning of a “tsunami of new claims” following the Supreme Court’s decision, our view is that these cases will not necessarily lead to a flood of successful claims from supposedly self-employed individuals claiming they are workers. The cases themselves are fact-specific, and if there had been some minor changes to the circumstances (for example if Mr S had benefited from an unrestricted right to provide a substitute for carrying out the work instead of him), there may well have been a different result. Not all those working in the “gig economy” will be workers rather than self-employed.
What these cases do show is that courts and tribunals will consider the reality of what is happening. Clever contractual wording will be disregarded if it does not reflect this reality.
The question that really needs to be answered now is how is the Government going to address the uncertainty about worker status? We have seen that the Government accepted the Taylor Review’s conclusion that there is uncertainty surrounding the existing tests to establish employment (or worker) status and a suggestion that in some cases there should be a presumption of worker status, but we await clarity on how new tests would work.
Following media pressure about zero-hours contracts, measures were introduced to provide some extra protection to those on such contracts. The Government’s response to the Taylor review includes making provision for payment of a premium minimum wage rate to those on zero-hours contracts. The Low Pay Commission will be making recommendations on this in the autumn.
It seems likely that pressure regarding the exploitation of so-called “independent contractors” will eventually result in additional protection for these individuals in the gig economy too.
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