Addison Lee is the latest company to suffer a knock-out blow in the battle between gig economy platforms and employment rights status.
Addison Lee treated its drivers as self-employed and as a result were not entitled to worker rights such as holiday pay, sick pay, national minimum wage or pension auto-enrolment. However, earlier, this month, the Employment Appeal Tribunal decided that Addison Lee’s drivers were workers and therefore entitled to these rights.
The decision may have further ramifications for Addison Lee, as it may in the future lead to HMRC deciding their drivers hold employed status for PAYE and NIC purposes.
Is radical change on its way?
In Matthew Taylor’s review of modern work back in 2017, several reforms were recommended to improve protections for vulnerable workers, including revisiting the legal definition of worker. That Tribunals and courts are ably applying the legal principles of establishing employment rights status to these new working platforms suggests legislative change may not be necessary.
However, recently leaked government plans reputedly receiving Theresa May’s backing suggest change may be on the way. In addition to the proposal to reform the legal definition of worker, the plans also indicate that:
- gig-economy workers could be given the right to request a temporary or fixed hours contract after 12 months;
- employers may be required to provide notice and/or pay compensation for cancelled shifts;
- the legal tests for employment rights status and tax will be aligned; and
- the enforcement of holiday pay will be brought under state control.
All of these proposals were put forward as part of Matthew Taylor’s review, so it is no surprise to see the Government getting behind them.
Will HMRC soon be enforcing holiday pay rights as well as national minimum wage?
Currently, individuals must bring a claim to the employment tribunal to enforce their holiday pay rights. Introducing state enforcement will clearly shift the balance of power to the individual and place greater risk on the employer.
Who could get the job of enforcing it? Probably HMRC, and with the impact they are making on national minimum wage enforcement, there’s a good chance they would be given the task.
Would there be penalties for those who don’t comply? Very likely and similar to the penalties that currently apply to national minimum wage (currently up to £20,000 per worker, plus naming and shaming).
Would it apply to every worker? Unlikely as the burden would be too great for any regulator to bear. When Matthew Taylor initially proposed state enforcement of holiday pay, he restricted its application to only those workers at risk of being exploited. But where does that line get drawn? Some may argue that the simplest measure will be to limit it to only those paid at national minimum wage rates. However, is that a fair cut-off point to switch from state enforcement to individual enforcement through the Tribunals?
With the possibility of extreme penalties for non-compliance, the legislators would have to think carefully to ensure there is clarity for all concerned if this change is made.
Will change happen?
Nothing concrete has been confirmed by Government. As Brexit uncertainty lingers, the government will want to ensure the UK is seen as an attractive place to do business. That will mean striking the right balance between protecting vulnerable workers from exploitation and enabling employers to operate flexibly with limited state intervention.
Uber next into the ring
Uber’s appeal against its drivers being deemed to be workers was heard in the Court of Appeal at the end of October and judgment is expected any day. The direction of travel suggests Uber will be next in line to pick itself up off the canvas. However, Uber has already indicated its intention to appeal to the Supreme Court if necessary. So, don’t expect it to throw in the towel just yet.
If you have any concerns about how these issues might impact your business, please contact Charlie Barnes.