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Business, taken personally.

Tribunal ruling raises questions about the real meaning of “self-employed” status

Posted by Anna Aldred on 10th August 2020

Over the last few months, there has been a real focus on what it really means to be a self-employed individual.

A recent Tribunal case put the spotlight firmly back over the issue. Previously believed to be self-employed, hairdresser Meghan Gorman won her Tribunal case and was successful in her claim for holiday, notice and redundancy pay from the salon she previously worked at.

This was because the Tribunal ruled that she should, in fact, be classed as an employee, not as self-employed.

In its ruling, the Tribunal considered several factors, balancing the indicators for self-employed status against those indicative of employee or worker status. Meghan had after all signed an Independent Contract for Services as a self-employed hairdresser. However, despite the Contract being labelled as an “Independent Contract for Services”, in reality, the salon exercised a large amount of control over what hours she worked, when she could take holidays and in fact, took part of her takings. Despite all these factors being indicative of an employee/employer relationship, she was not entitled to notice, holiday, or redundancy pay.

The Tribunal found in her favour, Due to the nature of their working relationship, the Tribunal could see there was a clear employee/employer style relationship. As a result, she should have been entitled to the same rights as her employed counterparts.

This decision is likely to have an impact on trades such as dentists, delivery drivers and bookkeepers where similar Contracts for Services are used. It is common in these sectors that individuals are labelled as self-employed individuals but are in reality more akin to employees or workers. It is a reminder to employers that a Tribunal will look at the reality of the working relationship and in some cases, it will disregard the label of the contractual documentation that is used between the parties, and look at what happens in reality.

Meanwhile … Uber waits for the Supreme Court’s decision about whether Uber drivers are in fact workers, rather than self-employed.

The “Uber case” was recently heard in the Supreme Court, with the Court expected to make a final decision on whether Uber drivers are in fact workers, rather than self-employed individuals. This is long-awaited by Uber after they were granted permission by the Court of Appeal in December 2018 to appeal against the decision that Uber drivers had deemed worker status.

Uber continues to argue that they act as an agent for the drivers, and all drivers are self-employed because Uber only acts as a technology platform which puts the drivers in touch with passengers. It argues that Uber itself is not a provider of taxi services. Uber has no written agreement between itself and the drivers, but they do have complex contractual documentation which explains the arrangement.

In response to Uber’s arguments, it’s drivers argue that they are in fact workers because of the degree of control that Uber has in arranging the taxi services on their behalf.

So far Uber’s legal argument has been dismissed and the decision by the Employment Tribunal, Employment Appeal Tribunal and Court of Appeal is that the drivers are workers for the purposes of employment legislation. By labelling them as such they accrue employment rights, including a right to notice pay, holiday pay and sick pay.

The Uber case is a prevalent example of the Tribunal exploring the impact of the “gig economy,” and how that interacts with the classic working relationships we all know. Rather than considering labels alone, the Tribunal has adopted the approach of looking at what happens in reality between individuals and who they work for.

The Uber case hearing concluded last month and the Supreme Court will now be considering the arguments put forward by both parties. It’s expected that a judgement will be handed down within the next few months, so watch this space!

If you have questions about your employment status or are unsure about the status of third parties you engage with, or whether or not your documentation is up to date and suits your working arrangements, get in touch with a member of our employment law team here.

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