Is your workforce
employed or self-employed? The recent high profile case involving Uber drivers
may well have connotations for other employers operating businesses on a
similar basis.
The question as to
whether your workforce or parts of it is classed as employed or self-employed
has been a source of contention between businesses and HMRC for many years.
The issue of
employment status is considered serious by HMRC, which is keen to get to the
bottom of whether claims by business owners that its workforce is self-employed
are genuine. If workers are deemed to be employed rather than employed, then
the business owner is liable for making tax and National Insurance
contributions. Obviously HMRC is eager to ensure it is receiving all the
contributions it should.
Uber Judgement: Drivers ARE Workers
Just in the past
few days and in one of the most high profile cases of its kind, the Employment
Appeal Tribunal (EAT) has confirmed that drivers for the well-known taxi firm
Uber should be classed as workers who are entitled to basic employment rights.
It was the Uber
drivers who argued that they should be classed as workers. In Aslam and others
v Uber BV and others, the Employment Tribunal held that the drivers are
entitled to receive paid annual leave and to earn the National Minimum Wage,
amongst other benefits.
Numerous factors
played a part in the ruling. Whilst Uber drivers are able to make their own
choice as to where and when they work, they are subject to an interview and
induction process and can be dropped if they fail to perform or are found
guilty of serious misconduct, following a set warning process.
The drivers however
have to work exclusively for Uber, which is a key indicator in establishing
whether a relationship is employment based.
There have been
other high profile cases in the past, for example Addison Lee, which met with
the same ruling as Uber. Deliveroo and CitySprint came under similar scrutiny.
What Now for the Gig Economy?
The gig economy –
the blanket name for the type of working arrangement that these companies
follow – has in the past involved numerous companies attempting to shroud their
workforce arrangements undercover of a self-employment basis. However, courts
and tribunals have recently uncovered the fact that they are in fact employment
based agreements.
The recent Uber
ruling will have far reaching connotations for its 40,000 or so strong
workforce. It is thought that many of the drivers will seek to make back-dated
claims for minimum earnings, holiday pay and other such benefits that they
should have been entitled to since they were taken on.
TUC general secretary Frances O’Grady said: “This
ruling should put gig economy employers on notice. Unions will expose nasty
schemes that try and cheat workers out of the minimum wage and holiday pay.
Sham self-employment exploits people and scams the taxman.”
Be Sure to Check the Employment Status of Your Workforce
It is crucial for
business owners to be clear on how their relationships with their workforces
will be construed by HMRC.
If you are unsure
as to whether your workforce should be classed as employed or self-employed,
discuss it with your local bookkeepers. They’ll advise you as to the correct
status so that you can take appropriate steps to ensure your business is risk
free in this respect.
