The Importance of Employee Status for Employers
Employment Law Firm in London
Drivers who make deliveries for Amazon have begun a legal process against the tech giant claiming they are not self-employed and should be classed as employees, or at the least workers, and given employment rights.
The claim follows a similar successful legal action taken against Uber in which it was found that Uber drivers were workers. In this week’s newsletter, Dragon Argent employment lawyers in London investigates this matter and the impacts these actions might have on SMEs.
Why does it matter?
Where an individual is classed as self-employed, they are not entitled to rights such as holiday pay, sickness pay, pension contributions or minimum wage. The claim against Amazon highlights the brewing conflict in the gig-economy between independent contractors empowered by technology and ability to work whenever and however they want, but who have less rights, security, and privileges than traditional workers and employees.
What is the difference between the self-employed, workers and employees?
Self-Employed: A person is self-employed where they have control of what work they do, when they do it and where or how they do it. They can work for other companies; they can hire a substitute to do the work for them; they cover their own expenses and equipment; and they are responsible for remedying any unsatisfactory work in their own time. Self-employed individuals are not paid through PAYE and they do not have the employment rights and responsibilities of employees.
Worker: A person is generally classed as a worker where they undertake to work or provide services personally (whether under a written or oral contract or not) for money or a benefit in kind; where they are under the supervision or control whilst carrying out the work; and where they cannot send someone else to do their work. A worker does not have to turn up to work if they do not want to and the business often provides materials, tools or equipment they need to do the work. Workers are entitled to be paid the minimum wage, paid for holiday; entitled to rest breaks; and protection against whistleblowing and unlawful discrimination.
Employee: A person is an employee where they are required to work regularly and have a minimum number of hours of work; where their work is supervised; and they are told what, when and how a piece of work should be completed. An employer contributes to an employee’s pension; they get holiday pay and are entitled to sick pay and maternity or paternity pay; and they cannot provide a substitute to carry out the work for them. Employees have employment rights such as minimum notice period to end their employment; protection against unfair dismissal; right to request flexible working; right to time off for emergencies; right to redundancy pay and the right to fair disciplinary and grievance procedures.
Caveat: If a person is self-employed, a court or tribunal may still regard them as a worker or employee even if there is a clear contract in place which states otherwise. What matters is the facts of the working relationship between the individual and the company and how the business works in practice. Additionally, HMRC may also come to a different conclusion to the tribunal for tax purposes, also irrespective of what is written in the contract.
Driving for Amazon
Amazon drivers are contracted as self-employed individuals (via a ‘contract for services’ or ‘contractor agreement’) with delivery companies who are partnered with Amazon.
The working relationship in reality is as follows – Amazon instructs the driver how they should work via an app. The app tells each driver what deliveries need to be made, where to make the deliveries, in what order to make them in along with the timing each delivery must be made by, and the app also suggests the best route the driver should take in order to deliver on time.
Amazon claims the app is only guidance and it is at the driver’s discretion whether to follow the apps suggested route or go their own way, noting Amazon fines a driver per each undelivered parcel. Amazon also requires drivers to work set shifts and book time off.
Taking a step back to where our employment law solicitor highlighted the differences between self-employed, worker and employee, it is completely understandable why these drivers are fighting for more rights, given the level of control they carry out their work in. Earning the minimum wage, receiving holiday pay and having the security of employment as a worker or employee could be life-altering for these drivers.
What does this mean for my business?
If an individual’s employment status is wrong, employers may have to pay unpaid tax and penalties for the period in which the incorrect status existed. Furthermore, staff may bring tribunal claims against you claiming their statutory payment entitlements which they have missed out which could be costly.
Employers should work out each member of staffs working status in both employment law and tax law to ensure you are paying staff correctly.
Employment Law Solicitors for Employers
Our employment law firm in London are here to help and provide a quick and effective initial assessment on a range of employment disputes. A consultation with one of our no win no fee employment solicitors will help you understand your legal options and what steps you can take.
If you would like our assistance, please click the link below to arrange a call and we would be happy to answer your questions!
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