Businesses warned over gig economy minefield
5th December 2017
A Cheltenham employment law specialist is urging local businesses who regularly use self-employed contractors to check the employment status of their workforce.
The warning comes in the wake of a landmark ruling by the European Courts.
Nick Rowe, partner and head of the Employment team at law firm Lodders (pictured), says the ruling by the European Court of Justice that a self-employed, commission-based salesman is entitled to workers' rights, including to claim back-dated holiday pay, could mean companies regularly using 'gig workers' could face huge financial repercussions.
"The case involved Conley King who worked as a window salesman for The Sash Window Workshop between 1999 and 2012, on a self-employed basis," explained Nick, who has extensive experience in advising individuals and employers about employment status matters.
"After he was dismissed from the firm, an employment tribunal ruled that Mr King should have been classified as a worker and as such have workers' rights.
"Mr King also brought a claim for £27,000 of holiday pay he believes he should have received, and the EU court ruled that he is indeed entitled to all his untaken leave from the company.
"The recent and widely reported developments in respect of work status are presenting a real issue for businesses that have been structured around the engagement of individuals who provided services on a supposed self-employed, contractor basis."
He added: "The decision could have significant further implications for local firms operating on this basis in the so-called gig economy and routinely using staff on self-employed contracts - such as taxi or delivery firms.
"They could face potentially huge - previously unconsidered - liabilities if that status is later successfully challenged in the same way as Mr King has done in this recent case. It is clearly sensible to check their workforces' employment status and the contractual documentation.
"Whilst the structure and wording or documentation covering the relationship between the parties in circumstances such as this, is never determinative of employment status, it can assist in establishing the understanding between the parties, which courts do consider when deciding upon these issues.
"It is also important for businesses to understand their potential exposure, so that they factor that in to their business planning."
For employers categorising their workers as self-employed, they could now be liable to pay back-dated and future holiday pay, as in the case with Mr King.
"The consequences for those working within the gig economy are likely to be profound," says Nick.
"Indeed, the detail of the ECJ's decision suggests that anyone with worker status will be able to carry leave over to subsequent years if they are unable to take it for reasons beyond their control."
This is the latest in a string of cases around the so-called gig economy, such as the ongoing case involving Uber, as well as that of Deliveroo and its workers' claim for holiday pay, and Nick says the message is clear:
"Gig economy workers are increasingly being seen as entitled to workers' rights. Employers should really take a step back and consider carefully their relationships with those undertaking work on their behalf and review exactly how they classify their workforce."
The case now returns to the UK Court of Appeal for a further ruling.
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