The Employment Tribunal decision issued in October 2016, that Uber drivers met the definition of ‘workers’ rather than being self-employed, is likely to impact across more than just the so-called ‘gig economy’. Importantly for the veterinary profession, any practices that make use of self-employed vets need to be certain of the basis on which they use these outside workers.
The legal position
Important legal rights only apply if an individual is an employee (such as the right to not be unfairly dismissed), although a number of important statutory rights are enforceable by workers (including the right to receive the National Minimum Wage and entitlement to paid annual leave).
Whether an individual has employment status is also a crucially important consideration when assessing whether that individual’s income should be taxed as income through PAYE, or whether the individual should account for tax in a different way.
Getting employment status wrong can have a significant impact on a business. Unfortunately, establishing whether someone is an employee, a worker or genuinely self-employed is not always straightforward, as Uber discovered at the Employment Tribunal.
The Uber decision
In Aslam, Farrar and others v Uber, two Uber drivers successfully argued that they met the definition of ‘workers’ under the Employment Rights Act 1996.
Uber gave evidence to say it contracted with its drivers on the basis that the drivers were self-employed partners, rather than workers.
In support of this interpretation of the arrangements, Uber argued that its driving partners were free to choose when they switch on the app and therefore when they work. The drivers also owned and maintained the vehicles they used to pick up fares.
The Employment Tribunal judge found in the drivers’ favour, determining that the drivers were not self-employed partners of Uber, but rather workers. The judge said that it was relevant that Uber:
- Interviewed the drivers
- Controlled information regarding the passenger
- logged drivers out of the app platform if they do not accept fares n Set the drivers’ routes
- Did not allow drivers to agree a higher fare with a customer
- Imposed various conditions on drivers regarding their vehicle
- Operated a driver rating system
- Administered a customer refund process that does not involve the driver
- Handled passenger complaints
- Reserved the power to amend the drivers’ terms without consultation
Getting employment status wrong can have a significant impact on a business. Unfortunately, establishing whether someone is an employee, a worker or genuinely self-employed is not always straightforward
The drivers in the Uber case are now entitled to 5.6 weeks’ paid annual leave each year, statutory rest breaks, a maximum 48-hour working week and the national minimum wage (and, if the driver is aged 25 or over, the national living wage).
When you consider the number of Uber drivers operating across the UK, you can see why Uber is appealing against the decision.
The impact on vets
Problems may arise where vets use those that claim to be in business on their own account – either as a sole trader or through a limited company, especially where the practice owner provides the contractor with patients, equipment, materials and support staff.
The problem becomes more acute if the contractor works when told to, doesn’t address errors at their own expense, and cannot use a substitute in their place (in other words, the contract is personal).
In light of the decision in the Uber case, could a purportedly self-employed contractor successfully argue that he or she should be treated as a worker in the same way as the Uber drivers did? If such an argument were to succeed, it could have a significant impact on practice owners.
Are they genuinely self-employed?
Whether someone is an employee, ‘worker’ or is genuinely self-employed is a question of fact in every case. What is clear is that the label the parties put on the relationship themselves is not a determining factor.
An Employment Tribunal (and HMRC if it is investigating whether the engagement has been taxed in the correct way) will look at the reality of the arrangements that are in place. Simply agreeing that an individual is self-employed will not of itself be sufficient to stop them subsequently arguing that the relationship was that of employer/employee or employer/worker. Where the individual contracts via a limited company, this would be one factor which points away from an employee/worker relationship. However, it would not be determinative.
A worker is defined under section 230(3) of the Employment Rights Act 1996 as an individual who has entered into or works under a contract of employment; or any other contract, whether express or implied, where the individual undertakes to do or perform personally any work or services for another party to the contract.
Do they undertake under the contract to personally perform work or services for a practice? This will depend on the terms of the agreement that is in place, but a degree of personal service is likely.
Other relevant factors that might point toward them holding worker status (or even employee status) are:
1. If the practice owner provides and maintains the tools or equipment used.
2. If they do not actively market their services to the world in general.
3. If they evidence that they have been recruited by a principal to work as an integral part of the principal’s operations (tending to infer worker status).
4. If they are integrated into or help manage the business. Someone that becomes integrated into the practice and is involved in the day-to-day management of its business is more likely to be considered an employee or worker than someone who would not be as integrated into the practice’s business.
5. If they do not have the opportunity to profit from their own good performance. Someone whose income fluctuates depending on the amount of work that they undertake is less likely to be considered an employee than an individual who receives a fixed and unvarying salary regardless of how they – or the business – performs.
6. If they are paid when absent due to holiday or sickness.
7. If the practice owner handles and administrates bookings and customer complaints.
Next steps
Veterinary practices should take this opportunity to review their existing arrangements with contractors, including locum vets. In particular, practices should ensure contracts with contractors (whether with individuals or personal service companies) include appropriate protections and indemnities in the event of a status challenge, whether by the individual or a third party – including HMRC.
Review results coming
These issues are not likely to go away. The Department for Business Energy & Industrial Strategy launched an Independent Review of Employment Practices in the Modern Economy (the Taylor Review).
The review, which was expected to run until last month, considered the implications of new models of working and their impact on the rights and responsibilities of individuals going forward. The results of the review are likely to inform the government’s industrial strategy in the future, which could mean further changes in legislation and regulation going forward.
