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Balancing workers' rights with the gig economy

Posted on 16 March 2017

Balancing workers' rights with the gig economy

What do a plumber, a minicab driver and a bike courier all have in common?

Well, according to a string of recent cases, each of them is a 'worker', and protected by UK employment law.

On 10th February - and hot on the heels of the recent Uber and CitySprint cases - in Pimlico Plumbers v Gary Smith, the Court of Appeal has weighed in on one of the hottest topics in UK employment law - the 'gig' economy and the concept of worker status.

Business owners - especially those that utilise technology platforms and online marketplaces - ought to take heed.

'Giggers' and the law

Depending on which side of the fence you sit, the gig economy either provides businesses and 'giggers' with the ultimate flexibility, or it provides employers with a convenient way of circumventing employment law protections. That is, until now.

The law recognises three categories of employment status. At one end of the spectrum are employees - those who work under employment contracts and who are subject to a substantial degree of control.

Employees are entitled to the full gamut of employment law protections and benefits.

At the other end of the spectrum are the truly self-employed. Such individuals operate a business on their account and, broadly speaking, are not protected by any employment laws.

Somewhere in the middle lies a nebulous third category - the 'worker'. Not quite an employee but not genuinely self-employed either, a worker is entitled to some, but not all, of the protections of UK employment law.

Determining which category your workforce falls into is becoming an increasingly difficult task.

Having a brand vs having a flexible workforce

Mr Smith was a 'Pimlico Plumber'. Pimlico's branding is ubiquitous on the streets of Greater London - all of its plumbers dress in Pimlico uniforms and drive gleaming branded vans, complete with toilet humour number plates such as LAV1 and F1USH.

Partly for this reason, Pimlico has become well-recognised, trusted and successful, and its plumbers often earn six figure sums.

During their relationship, both Pimlico and Mr Smith were on the same page - Mr Smith was self-employed.

He was responsible for providing his own materials, he decided when he wanted to work, what work he carried out and he took the relevant tax advantages of being self- employed.

When the relationship terminated, Mr Smith sought to argue that he was in fact an employee. Pimlico contended that Mr Smith was self-employed.

The Court of Appeal weighed down in favour of the nebulous intermediate category; that of the worker.

The legal tests to determine employment status originate from statute, but have been applied and have metamorphosed via case law.

It now seems that it is a question of degree (how much control is exercised? How much financial risk is borne? How genuine is the flexibility afforded?) as to whether an individual is an employee, worker, or self-employed.

One of the issues facing Pimlico and other companies is how to reconcile a strong brand, often headed by individuals who wish to maintain tight quality control, with a genuinely flexible bank of staff who are in business on their own account.

As the law currently stands, that balance is one that is immensely difficult to achieve.

Any business owner in this situation should ensure that their documentation is up to scratch, and should carefully scrutinise their working practices and business priorities to ensure that they come down on the right side of the line.

Susannah Kintish is an employment lawyer at Mishcon de Reya, which acted for Pimlico Plumbers in its case against Gary Smith.

As first published in Retail Week (subscription only).

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