Published by: Nicola Smyrl

Are your staff employees, workers or contractors?

The recent decision of the employment tribunal in the case against Uber concerning the employment status of individuals who drive for Uber has generated a great deal of media interest. 19 Uber drivers engaged as self-employed contractors were found by the employment tribunal to be “workers” for employment law purposes.

In this article we are looking at how this issue may affect your business in practice.

Why does it matter?

The employment status of individuals affects the rights that they have under employment legislation.

Worker rights include:

  • a minimum of 5.6 weeks’ paid holiday per year;
  • rest breaks in accordance with legislation on working time;
  • to be paid at least the National Minimum Wage;
  • not to be subjected to unlawful deductions from wages;
  • to participate in an auto enrolment pension scheme subject to eligibility;
  • protections under discrimination and whistleblowing legislation.

In addition to the above entitlements, employee rights include:

  • the right not to be unfairly dismissed and to receive a statutory redundancy payment in some circumstances;
  • the right to maternity, paternity, adoption and shared parental leave and pay;
  • the right to receive Statutory Sick Pay.

It is estimated that businesses can save 30% by engaging a self-employed contractor rather than an employee.  The risks for businesses of engaging individuals on the wrong terms can be significant.

As the recent case against Uber has demonstrated, even if you have agreed to engage an individual as a self-employed contractor, this can be challenged by the individual in the employment tribunal.

It is not uncommon for “self- employed contractors” to argue that they have an employee or worker status when the arrangements terminate.   Additionally, HM Revenue & Customs can review the arrangements from a tax perspective. To read more click here.