Employment status and the gig economy were rarely out of the headlines in 2018. This theme seems set to continue into 2019 and beyond. The recent decision of the Court of Appeal in the Uber case, followed by the Government’s proposals for reform targeted at improving conditions for atypical workers, means that it is important for businesses to understand the potential risks and upcoming changes in this area.
Employment Status Case with Uber
Recently, the Courts have grappled with various cases concerning employment status of individuals without regular working arrangements. One example is the ongoing litigation against Uber by their drivers who contend that they have worker status despite the fact that the contractual documentation provides they are self-employed.
The Court of Appeal found Uber drivers are workers and have basic employment rights including paid holiday and the national minimum wage. Relevant to this decision was that the drivers were required to provide their services personally and they were integrated into and working as part of the Uber business rather than for themselves. The Court stated in this case and others that they can consider the nature of the relationship in practice.
It is increasingly difficult for businesses to have any confidence that they have correctly categorised their staff. All businesses are well advised to review the manner in which they engage staff in light of recent case law and Government proposals.
The Government has recognised the issues relating to employment status. In November 2016, the Government launched the Independent Review of Employment Practices in the Modern Economy to consider the implications of new models of working for the rights and responsibilities of companies and individuals.
Modern Working Practises
Matthew Taylor’s report, Good Work: the Taylor Review of Modern Working Practices was published in July 2017 and made 53 recommendations. Matthew Taylor was particularly concerned that businesses should not be able to avoid responsibilities to individuals by trying to misclassify or mislead their staff. Many of the recommendations in his report are aimed at addressing this issue.
The Good Work Plan - Government's Position on the Taylor Review
The Good Work Plan was published on 17 December 2018 and includes the Government’s position on the Taylor Review. It has been described by the Government as the biggest reform in employment law in the last 20 years. The proposals which are likely to be of interest to most employers include:
- Clarification of employment status - The Government agrees with Matthew Taylor’s concerns regarding the misclassification of staff and says it will “bring forward detailed proposals” on how the employment status frameworks for tax and employment rights should be aligned and there will also be legislation to “improve the clarity of the employment status tests”.
- Holiday Pay - The Government will launch a campaign to boost awareness of holiday rights and will increase the reference period for calculating holiday pay from 12 weeks to 52 weeks. This ensures that workers who do not have a regular working pattern are not disadvantaged by having to take their holiday at a quiet time of the year when their weekly pay might be lower.
- A new right for workers to request a more predictable and stable contract will be introduced. This is intended to address the issue of “one sided flexibility”. It is anticipated that this will work in a similar way to the current rules on flexible working.
- The “Swedish derogation” in the Agency Workers Regulations 2010 currently allows temporary work agencies to avoid the “equal treatment” provisions of the AWR by engaging agency workers in a way that allows for pay between assignments. This will be abolished from next April.
- All employees and workers will be entitled to a statement of terms and conditions from day one. The type of information to be included in the statement will also be expanded.
Off Payroll Working Rules
In addition, the current rules relating to “off payroll working” which apply in the public sector will be extended to large and medium-sized businesses in the private sector from April 2020. Essentially this means where the IR35 rules apply, the fee payer rather than the intermediary will be responsible for deducting income tax and employee NICs from, and accounting for employer NICs on, broadly, the fees it pays to the intermediary.
Whilst none of the proposals set out in the Good Work Plan are likely to come into force before April 2020, it is clear that the law relating to atypical working relationships will be subject to a significant change in the coming months and years and employers need to consider how to address these changes in good time.
Taylor Walton will be running free workshops in the coming months aimed at assisting owner managed businesses to asses commercial risks relating to the status of their staff. If you are interested in attending these workshops please contact our marketing department on 01582 390568 or email email@example.com.