June 18, 2018

The dangers of the ‘gig economy’ and why this might affect you

The supreme court decision in pimlico plumbers v smith

What was the decision?

On 13 June 2018 the Supreme Court held that Mr Smith was a worker of Pimlico Plumbers, although not an employee. Various media outlets have incorrectly reported that he has been found to be an employee, which just proves how easy this area of law is to get wrong!

Wednesday’s legal ruling, from the highest court in the United Kingdom, reaffirms the tests for whether an individual who works for your company is, in law, an ‘Employee’, ‘Self-Employed’, or partway between the two as a ‘Worker’. The answer is not as straightforward as looking at what label the parties agree to use, or what the taxation arrangements are.

Contrary to the belief of many employers, just because you agree with an individual that they will be called ‘Self-Employed’ and they will look after their own tax and national insurance affairs, this does not mean they are not, in fact, an Employee or a Worker.

What is the main difference between Employee, Worker and Self-Employed?

Employees most importantly have protection from unfair dismissal (after 2 years length of service), although they also enjoy other benefits not afforded to those who are not employees. Employees also enjoy all the benefits Workers enjoy.

Workers have fewer rights, but are still entitled to paid holiday and sickness, as well as other protections.

Truly self-employed individuals cannot claim unfair dismissal, and are not entitled to holiday or sickness pay.

Why does this affect me? All my employees are treated as exactly that; employees.

Business owners are often surprised by where a challenge can come from. Have you thought about the status of your accountant, who you may have thought was selfemployed? They might not be! And when you take on contracts to provide services to a client of yours, you may be surprised to find that their own ‘self-employed contractors’ may then claim they have become employed by you via a ‘TUPE transfer’.

A few years ago one business, who ceased to use a firm of lawyers, was surprised to find that they had inadvertently taken on several of the Solicitors as their own employees!

How can I tell the whether someone is my employee?

There is no easy, one-size-fits-all answer, and roles must be looked carefully, applying the appropriate guidance from the courts. Here at Moorepay, our skilled Employment Law Advisors advise on such questions every day, and give practical advice on how to manage such matters moving forward.

We will be happy to help you navigate the ‘minefield’ on this issue, or any other you may face, so please do contact us for an initial free advice on 0845 073 0240 (Option 2) quoting FA001.

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About the author

Philip Warnes

Employment Tribunal Consultant