Employment Status Essay PDF

Preview

Summary

The distinction between workers and employees in the UK is not clear enough by statute. Different courts and tribunals used different tests. The recent trend of the gig economy makes it more complex. The question asks to find out current mechanisms and problems to identify who is a worker and who is...

Description

‘The division between employees and workers has important implications for the enjoyment of employment rights, but is still lacking in clarity.’ 2016

‘The distinction in law between the categories of employees and workers is unclear and unprincipled, and requires reform.’ 2017

‘The distinction between employees and workers is outdated, and needs to be radically revised.’ 2018

To what extent are the current definitions of ‘employee’ and ‘worker’ adequate to ensure proper protection of labour rights? 2020 oct

‘The distinction between workers and employees in English law is arbitrary and leads to unfair outcomes in terms of the legal protection of workers. The legal category of workers should be abandoned.’ Oct 2017

Introduction: The distinction between workers and employees in the UK is not clear enough by statute. Different courts and tribunals used different tests. The recent trend of the gig economy makes it more complex. The question asks to find out current mechanisms and problems to identify who is a worker and who is an employee. It asks as well as to find out the need of reforming the current system. To answer this, I will first find how UK statutes, courts and tribunals define and ensure the rights of workers and employees. I will then find out why and how the current system can be reformed.

Statutory Definitions of ‘Workers’ and ‘Employees’: Section 230 of Employment Rights Act 1996 tried to define the employment status of workers and employees. S. 230(1) says the employee is who goes to work under a contract of employment. Wordings of the s.230 (3)(a) which tried to define the first category of worker are almost the same as the definition of employee. But s.230 (3)(b) defined another category of workers which is known as so-called ‘limb (b) workers. The main difference between a worker and an employee is to provide service personally. Though the Act defines them separately but wordings are clumsy to distinguish them clearly.

Reg 2(1) of the Working Time Regulations 1998 SI 1998/1833 and s.54 (3) of the National Minimum Wage Act 1998 also defined ‘worker’ status almost in the same way.

Tests for Employee Status set out by Courts: Control and economic reality test was used in In Ready Mixed Concrete case. According to this case, if court finds there was not sufficient degree of control mechanism by employer over the workforce then he/she will not be an ‘employee’ rather will be an independent contractor. Lee Ting Sang v Chung Chi-Keung case also can be cited.

Recent path-breaking case is Autocleanz where UKSC set out relative bargaining power test to determine the employee status. It was held that the content of the written agreement between employer and employee is not everything to determine employment status. Here, Lord Clarke stated in para 35 that “the relative bargaining power of the parties and all other circumstances will also need to be taken into account.” He further stated that if there was any genuine clause of using substitute then it would be an independent contractor. Mutuality of obligation test was set out in O’Kelly. According to this case, mutuality of obligation about the work between the parties was mandatory for the contract of employment. But, Autocleanz confirmed that this is not required to be an employee. It seems that some lower courts are still following O’Kelly. Such as Quashie, Smith v Carillion, and Windle. It seems that the issue again needs to be confirmed explicitly by the SC.

Mechanisms to set out Worker Status: In Winkelhof, using the s.4 (4) of LLPA 2000, CA held that the claimant was not a worker for the protection of discriminations for whistleblowing against partnered LLP. But, UKSC overturned this and marked her as the worker because she personally performed the job and not for a customer or client. In Pimlico [2018], Lord Wilson told that the court will interpret clumsy words of the statues in a way that will give effect the intention of the Parliament which is protecting the rights of working people. It also stated if employee/worker can’t set the substitute freely then it will not negate the employment status. Perform the job personally test set out by this case. Here court checks whether the individual perform the job personally or there is genuine substitution clause i.e. employee is free to set substitution without prior approval of the company.

What about Gig economy Workers? This is a new concept to the labour market. So far no UK statutes define their employment status and protect their employment rights. Due to the nature of their work, it is contradictory whether they are workers or independent contractors. In cases such as Addison Lee, Citysprint ET confirmed that the workforce of the gig economy is ‘workers’ and thus entitled to protect employment rights for workers. In the most recent case, Uber BV v Aslam [2021], UKSC denied Uber argument that the drivers are independent contractors and held that they are ‘limb (b) workers’ within the meaning of s.230 (3)(b) of ERA 1996. A strong control mechanism by Uber over the drivers was one of the reasons for this decision. But, the High Court in Roofoods Ltd [2018] held that gig economy workers are independent contractors. HC emphasized the substitution clause. But, to substitute cyclists needed prior approval from the company. This indicates that cyclists were not 100% free to do their work personally. But, still HC held in that way. It is hoped that this will be overturned by SC.

Problems to the Current System and Need to Reform: Employment status is important because of what shorts of rights one working people can enjoy and what shorts of responsibilities are owed to them by an employer that depends on this status. Different statutes of the UK set out some separate rights for workers and employees. Employees’ are more protected by different rights than ‘workers’. McGaughey stated that “all employees are workers but all workers are not employees in terms of the rights they both enjoy.” (A Casebook on Labour Law). Another category of employment status named by ‘self-employed’ don’t have almost any statutory employment rights as they do their own business. Relevant statutes are not clear to select the employment status. Case laws are fact-oriented. In this scenario, employers often try to avoid their liabilities over their workforce using different ‘sham’ contractual terms. Technology, socio-economic culture also have been changed. So to cope with the modern working practices, the overall setup which identifies the employment status should be reformed. To do that, UK Government commissioned a Committee lead by Matthew Taylor in 2016. They published a report on 11 July 2017 with around 53 recommendations. It stated that "Status of employment should be simpler, clearer and give individuals and employers more information, a greater level of certainty as they can understand their rights and responsibilities " (Taylor Review) In reply, the Government published a “Good Work Plan’ and agreed to accept 51 suggestions. As a part of this, the Government issued three secondary legislations. In the Queen Speech

2019, the PM proposed a new ‘Employment Bill’ to change all of these ambiguities. Due to Covid-19 or unwillingness of the Government, still, now the Bill couldn’t see the face of light.

Conclusion The Parliamentary intervention should be needed to revise and reform these outdated rules and tests for employment status following the Taylor Review and recent judgments of different cases. McGaughey argues that political reason is behind the longstanding problem. Parliament must look into this matter and provide a better approach with much clarity....