Status of employees in the gig economy

The boom in the so called ‘gig economy’ means that firms are increasingly trying to categorise their workers as self-employed meaning that the company does not have to make payments for holiday pay, sick pay, etc. However, the courts are pushing back against this and are willing to describe people as ‘employees’ or ‘workers’ to increase the employment protection enjoyed by people working for such organisations.

The Supreme Court has handed down a judgment in the case involving Pimlico Plumbers.

In that case, a plumber had worked for the company for 6 years. During this time, he was described in his contract as ‘self-employed’. However, he drove a branded van, wore the company’s uniform and he had to work a minimum number of hours per week. When the plumber suffered a heart attack, the company took his van away from him and refused his request to work three days per week rather than five.

The plumber claimed that he had been unfairly dismissed – but he could only bring such a claim if he was classified as a ‘worker’, rather than being self-employed.

The Supreme Court upheld the decision of the Court of Appeal and declared that he was a ‘worker’. As such he was entitled to a national minimum wage, holiday pay and protection from discrimination. The case will now return to the Employment Tribunal for the unfair dismissal claim to be heard.

The Court said: 'Although the contract did provide him with elements of operational and financial independence, Mr Smith's services to the company's customers were marketed through the company.

More importantly, its terms enabled the company to exercise tight administrative control over him during his periods of work; to impose fierce conditions on when and how much it paid to him, which were described at one point as his wages; and to restrict his ability to compete with it for plumbing work following any termination of their relationship.'

The case was specific to its own facts and it is likely that other cases involving other companies and the so called ‘gig economy’ will continue to be brought before the courts.

However, it is important for employers to carefully check the contracts and employment status of those people who are currently described as ‘self-employed’.

To discuss this or any other employment related issue, contact us.

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