124 June 2017
Laura Shoaf, Managing Director of Transport for the West Midlands, warns that 'skills are in short supply. We need more people interested in transport and engineering'.
The dynamic nature of the transport sector requires employers to constantly evolve and adapt to fast changing market conditions. Transport employers are increasingly engaging zero hours workers, agency workers and self-employed contractors to manage fluctuating workforce demands. With this rise in different categories of workers comes the question of worker status – are these individuals employees, workers or self-employed contractors?
Employment status is certainly in the spotlight with a number of Government inquiries underway and several high profile cases in the media, many in the transport sector.
First, it determines their employment rights. Employees are entitled to much more employment protection than workers or self-employed contractors, including the right to claim unfair dismissal. A worker falls into the middle bracket when it comes to employment rights which are largely limited to national minimum wage, holiday pay and discrimination protection. Self-employed contractors on the other hand have very little employment protection. Secondly, employment status also has an impact on the tax treatment of an individual.
The legal tests – personal service, control, integration
Worker status was confirmed and these long-established employment status indicators were considered in the case of Pimlico Plumbers where the Court of Appeal focused on the limited right to substitute, personal service requirement, the level of control and the degree of integration into the business (think - branded uniform, branded van, 40 hours per week).
The reality of the relationship
Tribunals are showing a willingness to look behind the contract and establish the reality of the relationship. In the recent Citysprint case, the Employment Tribunal found that the tender document provided to couriers (an electronic tick list pointing towards self-employed status) did not reflect the reality of the situation and the courier was found to have worker status. The Uber Tribunal case (which is being appealed to the Employment Appeal Tribunal) produced a similar result with the taxi drivers being found to be workers by the Tribunal.
A holistic approach
The First Tier Tax Tribunal cautioned against using a checklist approach and confirmed that it is necessary to evaluate the whole picture in Dhillon v HMRC. In this road haulage case it was argued that the lorry drivers were self-employed contractors, however the Tribunal disagreed and confirmed the drivers had employee status for tax purposes. The Tribunal emphasised the importance of an informed, considered, qualitative appreciation of the whole picture. Taking a holistic approach has been endorsed in many of the recent cases.
So what are the themes? Control, personal service, integration, in business on own account, substitution, autonomy and mutuality of obligation are certainly key. However, there is an additional (and rather intangible) requirement to step back and look at the whole picture.
With a record breaking 4.79 million people self-employed, recent case law and the UK's exit from the EU it is unsurprising the Government has commissioned not one but two reviews considering the future world of work and modern employment practices (the Taylor Review).
The reviews are focusing on the rights of workers/agency workers/self-employed individuals, zero hours workers and potential trade union representation for those working in non-traditional employment roles as well as employer freedoms and obligations.
The recent Work and Pensions Committee Report on employment status arguably confirms what many commentators are thinking - "It is clear that current ways of categorising workers are creaking under the weight of the changing economy".
Employment status is a key issue for the majority of employers, particularly those in transport. Although the employment status debate has been on-going for decades, the growth of the gig economy has certainly put the question back on the agenda. The transport sector is well aware of the benefits of a flexible workforce and that resourcing staff is not an easy task. The Government has to keep up with the commercial reality and ensure that workers are adequately protected in the evolving economy, whilst not obstructing business growth.
This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.
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