Identifying false self-employment



A string of recent tribunal claims have highlighted the spread of false self-employment, especially in the so-called “gig economy”, by organisations that aim to gain market advantage by escaping the need to comply with key statutory rights such as the National Minimum Wage, holiday pay, and the ability of workers to access the statutory union recognition regime (see Chapter 5). 


With union backing, tribunal claims have been pursued against key players in the gig economy, including transport service provider Uber, national logistics company UK Express, online retail giant Amazon, courier drivers for delivery firms DX and Hermes, Royal Mail Parcelforce drivers, citySprint and Addison Lee, Excel and E-Courier. In addition, the Equality and Human Rights Commission continues to support a key case against Pimlico Plumbers. (The Supreme Court judgment is awaited as Law at Work goes to press.) 


Regardless of what the contract documentation says, tribunals must examine the whole context and take into account the parties’ unequal bargaining power to work out the true agreement between them. To decide whether individuals qualify for statutory worker rights, the starting point is always the language of the statute, not the label chosen by the employer (Uber & Others v Aslam & Others [2017] UKEAT/0056/17/DA). 


Contract documentation can be set aside if it fails to reflect the true terms of the agreement between the parties (Autoclenz v Belcher [2011] ICR 1157). 


Tribunals are expected to take a “realistic and worldly wise” approach (Autoclenz v Belcher [2011] UKSC 41). Increasingly, tribunals take particular note of marketing material that gives customers the impression of a directly employed workforce, ready to provide services when called on, and the way it often contrasts with contractual documentation carefully designed to look like “self-employment”. The non-negotiable “take it or leave it” nature of standard contract documentation is also significant. 


High levels of monitoring and control (such as use of GPS tracking), branded uniforms and equipment and control of time schedules are also factors that point away from genuine self-employment (see, for example, Pimlico Plumbers Limited & Charlie Mullins v Smith [2017] EWCA Civ 51). 


Similarly, prescriptive recruitment and induction processes and the use of sanctions, such as temporary or permanent withdrawal of access to the source of work, can also be strong indicators that someone has worker status and is not genuinely self-employed. For example, in Pimlico, the sanction for plumbers who broke rules such as the ban on working privately for PPL customers was “instant dismissal”. And in Uber, declining three trips in a row resulted in the sanction of being forcibly logged off the App (denying drivers access to the ability to earn) for 10 minutes. Uber also used passenger ratings to monitor drivers’ performance. Anyone who failed to make the grade after a series of “quality interventions“ had their account “deactivated”. In both cases, the individuals concerned were found to have “worker” status. They were not self-employed. 


Inequality of bargaining power is a key feature of these cases. In Uber, the tribunal condemned Uber’s use of “fictions, twisted language and even brand new terminology”, concluding that it was unreal to deny that Uber was in business as a supplier of transportation services and “faintly ridiculous” to describe Uber in London as a ‘mosaic of 30,000 small businesses linked by a common ‘platform’”. The drivers, many of whose first language was not English, did not and could not negotiate as equals with Uber and were in no position to grow their business, “unless growing his business simply means spending more hours at the wheel” (Uber & Others v Aslam & Others [2017] UKEAT/0056/17/DA). 

 


Although tribunals must take the parties’ bargaining inequality into account when working out what the parties agreed, tribunals are not allowed to rewrite the contract terms, however unfair, regardless of the inequality in the parties’ relationship (Smith v Carillion (JM) Limited [2015] EWCA Civ 209). 



Workers engaged in false self-employment miss out on rights such as:


• paid sick leave;



• limits on working hours and holiday pay;



• overtime rates;



• redundancy pay;



• travel allowances;



• pension contributions (including access to auto-enrolment); 


• the right to access statutory union recognition; and



• employment protections such as the right to claim unfair dismissal and protection from discrimination at work.



Employment status is not a matter of choice. It is a matter of law.


In an important new ruling, King v The Sash Window Workshop [2017] C-214/16, the European Court of Justice has significantly raised the stakes for employers found to have engaged in false self-employment. In this case, the ECJ has confirmed that falsely self-employed individuals found to be workers can claim statutory holiday pay from their start date, which in King’s case, represented a right to recover 13 years of holiday back pay. This case is summarised on page 120, Chapter 4.