The BBC has reported the latest legal decision to affect the so-called “gig economy”. This expression refers to working arrangements between parties in which one or both of the parties try to establish that the other is a self-employed independent contractor.
It is essential in a working relationship that proper consideration is given to the status of the worker. The consequences of getting it wrong can be far-reaching and expensive! The law recognises three working status being Employee, Worker and Self-Employed Contractor.
The scope of legal protection and entitlement varies greatly between each of the three categories. It is an employee who enjoys the highest degree of employment protection rights including the right to claim unfair dismissal, receive redundancy payments and maternity protection.
A self-employed contractor enjoys the least amount of protection and is unable to bring claims of unfair dismissal etc. However, an ever-increasing amount of employment protection entitlements are attaching to workers. This includes an entitlement to receive the national minimum wage, paid annual leave and to receive holiday pay.
The “label” which the parties themselves attach to a working relationship is not determinative. It is a matter for an employment tribunal and county court to make enquiry as to the real circumstances and practicalities of the relationship and to assess which category an individual case falls into. It is often the case that the parties own description is a single factor that is taken into account by the judge. This creates a degree of uncertainty for the parties and proves to be an increasingly complicated legal question to be determined.
The reported case of Mr King whose case has been assessed by the European court of justice has raised the stakes. Usually, claims relating to payment of salary and other breaches of contract are limited by a six-year limitation. However, the ECJ has now indicated that it cannot see any reason why a claimant who has not received holiday pay for a longer period (in Mr King’s case it was 13 years), cannot claim this payment for the whole duration of the period of loss.
The case has been referred back to the Court of Appeal for further consideration, but potentially this could give rise to increased numbers of claimants trying to recover and recoup past losses. With the recent abolition of tribunal fees, it is likely that there will be an increase in claims been presented.
For specialist advice on employment law matters including the use of sub-contractors and self-employed people to undertake work on your behalf, call 01792 450010 or email [email protected]