What we know about employment status

9 Aug 2018 By Jeff Middleton

Jeff Middleton reviews the stream of recent cases and asks where these decisions leave businesses and, in particular, partnerships

Some of the claims brought by individuals seeking to argue that they are not a self-employed contractors but are instead either an employee or a ‘worker’ have been brought by those working in the so-called ‘gig economy’ – such as taxi drivers offering their services via digital platforms like the Uber taxi app (with the Court of Appeal due to reconsider this claim in October 2018). 

Some, meanwhile, have been brought by those working in a more traditional manner – such as the seemingly self-employed plumber who recently succeeded in establishing before the Supreme Court that he was a worker for Pimlico Plumbers (founder Charlie Mullins pictured above). 

However, what all these employment status claims have in common is that they are motivated by a desire to establish entitlement to employment rights which are only enjoyed by either employees or workers. For example, only employees have the rights not to be unfairly dismissed and to receive a redundancy payment; whereas workers enjoy certain minimum rights, such as restrictions on their working time, and to receive paid holidays and the national minimum wage. 

It is not uncommon for individuals to work for many years before deciding to challenge their employment status when they realise that doing so will grant them access to particular employment rights. Take for example Mr King, who worked as a commission-only window salesman for more than 13 years before successfully claiming he was in fact a worker entitled to paid holidays (having succeeded before the European Court of Justice, Mr King’s claim will be heard by the Court of Appeal in November 2018).

Time for change

The seemingly endless stream of cases has led to a widespread recognition that our current employment law needs updating. Part of the problem is that the current law which defines who is an ‘employee’ is not found in a statutory definition, but is instead outlined in complex case law which has developed over the years. This places a focus on difficult-to-understand concepts such as ‘mutuality of obligation’, ‘control’ and ‘personal performance’. These tests are not user-friendly; it takes employment lawyers many years to develop a gut instinct for whether the test has been satisfied, and there is always some degree of uncertainty. 

The difficulties with the current tests for employee and worker status were acknowledged in the July 2017 Taylor Review. In response, the government has pledged to consider the introduction of statutory tests for employee, worker and self-employed status, and whether any new statutory tests could be simplified and made more precise (for example, by adding weight to certain factors or using a points-based system). 

The law on partners

So far, most of the focus of case law has been on individuals seeking to establish that they are either employees or workers, but what about the status of partners? What rights do they have? 

The Court of Appeal has confirmed that true partners are not employees, and therefore do not enjoy the right not to be unfairly dismissed, or to receive a redundancy payment. But can they be a worker? 

In the context of LLP members at least, the Supreme Court in 2014 held that an equity member of law firm Clyde and Co LLP was a worker and therefore eligible to bring a whistleblowing claim against the firm. However, the Supreme Court left unresolved the question of whether partners in general partnerships can also be workers. It is surely only a matter of time before we see a claim from a general partner seeking to establish that they also hold the status of a worker.

Jeff Middleton is a partner and head of employment, education and pensions at Hill Dickinson

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