The significance of the distinction lies in the legal rights attached to the different groups. Employees are entitled to the whole range of employment rights, including unfair dismissal protection, sick pay and maternity/paternity leave. Workers have more limited rights, including to the national minimum wage and holiday pay. They are also protected from discrimination. Self-employed contractors have far fewer rights but enjoy flexibility and different tax treatment. Various tests are used to decide status, including whether personal service is required, the degree of control exercised over the individual and if the business is a client or customer of the individual.
The Court of Appeal’s decision in the Uber case last December is the latest in a steady stream of cases on employment status. The court held that drivers were workers, rather than self employed contractors and as such had the right to paid holiday, as well as the national minimum wage. This followed a decision by the Supreme Court in the Pimlico Plumbers case that the apparently self employed plumbers were in fact workers. Previous cases, involving both cycle couriers and drivers for Addison Lee followed the same line, with the individuals held to be workers. The only case to buck this trend was the High Court decision in the Deliveroo case, where the riders were held to be self employed. However, this was in the context of an application for collective bargaining recognition and arguably different considerations applied.
Cases in this area tend to be quite fact sensitive, so it is hard to draw general conclusions. However, there a few take aways from the recent cases. The degree of control exercised over the individual is likely to be key, as is whether or not they are required to perform the services personally. In the Pimlico case, although there was the right to supply a substitute it only applied to other Pimlico operatives. The implication is that only a totally free right of substitution will count towards self employment. Also, the written contract will not always be determinative, where these do not reflect the reality of the situation, especially where the relevant terms are standard and non-negotiable and the parties are in an unequal bargaining position.