By Patrick Stewart
The recent case of the Pimlico Plumbers, following on from that concerning the Uber drivers, shines a spotlight on the new economic work models which operate very differently from those in the traditional workplace and how the Tribunals and Courts are dealing with this.
To avoid confusion, I refer to the parties seeking services as “the Company” and the party providing the services as “the Individual”.
The Pimlico Plumbers and Uber business models seek to treat Individuals as self-employed, operating within a work system largely organised and regulated by the Company. The Company extols the benefits to the Individuals of such an arrangement, particularly with reference to flexibility. To an extent this is true, the Individuals are free to work when they wish and determine what work they do. The downside of the arrangement is that the Individuals have fewer (if any) rights which they would otherwise be entitled to, including the right to benefit for auto-enrol pension, right to paid leave, rest breaks, minimum wage and rights under anti-discrimination legislation.
In both the Uber and the Pimlico Plumbers cases, the issue that had to be dealt with was whether the relationship between the Company and the Individuals is one of genuine self-employment or not. The Individuals claim that they were workers.
A worker enjoys limited employment rights, less than those of an employee, but more than a self-employed person.
The cases largely turned on the extent of control which the Company exercised against the Individuals or, put it another way, the level of subordination of the Individual to the Company. In the Pimlico Plumbers case, the Individuals wore Pimlico Plumbers’ uniform, operated from a van branded with the Pimlico Plumbers’ logo (a van which the Individual had to purchase), were subject to strict rules governing customers who did not pay their bills and were expected to work a minimum number of hours per week.
In the Uber case, the Company controlled the information available to the drivers, the Company provided routes that the drivers were to follow. The drivers had a discretion to depart from this course but at risk if they did. The financial arrangements were all dealt with between the Company and the passengers with the drivers not being involved. The Company determined what vehicles were acceptable. The Company had a rating system which they operated for drivers. The Company dealt with complaints and rebates – again the drivers took no part in such discussions.
The cases demonstrate the tension between the Company wishing to present a commonly controlled presence to the customer and the loose arrangements which generally apply in circumstances where companies dealing with self-employed contractors, the less control the Company has over the Individual, the more likely it is that there will be a finding of self-employed status.
In Pimlico Plumbers, much of the Court of Appeal’s time was spent considering a substitution issue. The cornerstone of employee and worker status is that the Individual provides personal service. He does the work. A simple way to circumvent this, and so avoid employee/worker status, is to provide in the contract that the Individual may arrange for another to undertake the work. What is clear is that if the contract allows an unqualified right for substitution, it must be a contract for a self-employed contractor. Matters can be complicated where the Company seeks to impose conditions upon the right to use a substitute – whether in terms of the circumstances of which substitution is allowed or who can be the substitute. In that case, the more control the Company exercises over such a right, the more likely that the relationship will be seen as one of employment or worker status.
In light of these decisions, what can we learn from the cases?
- What is clear is that an unqualified right to provide a substitute will confirm self-employed status in respect of any other arrangements. Where the Company wishes to exercise some control over the issue of substitution, then the safest course would be to include a right to have to approve the substitute. Where the contract provides that substitutes must have certain qualifications or that substitution is only allowed where the Individual is prevented from undertaking services due to ill-health, it is more likely that the Court will hold that personal service is preserved and therefore self-employed status not achieved.
- Beyond that, minimal control by the Company as to how the Individual undertakes the services is required to avoid to preserve self-employed status. The more control the Company exercises, the less likely self-employed status will be achieved. Of course, this does rather counter to wishes of companies seeking to exercise such control.
A final word of warning – if the Court believe that the written documentation is a sham and that the actual arrangements being implemented differ, then they are entitled to ignore the contracts and look at those actual working arrangements. Therefore, if a document allows an unqualified right to substitution but in fact the Company refuses to authorise such an arrangement in practice, then that working practice may trump the documentation and self-employed status will not be achieved.
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