UK: Is The Plug About To Be Pulled On The Gig Economy?

Last Updated: 3 August 2018
Article by Lydia Newman

Pimlico Plumbers' case raises questions about how employment status is defined, while employers need to be mindful when dealing with sickness absence for employees with disabilities

In one of the most widely publicised employment law cases for some time, Pimlico Plumbers and another v Smith [2018], the Supreme Court confirmed Mr Smith was a worker and therefore entitled to employment rights. This long-running case will have many implications for employers.

Mr Smith worked as a plumber for Pimlico Plumbers (PP) for six years prior to suffering a heart attack. During this period, he described himself as self-employed and filled in self-assessment tax returns accordingly. He had not received holiday pay or sick pay, but was contracted to work a certain number of hours a week and provided with a company van.

Following his illness, Mr Smith requested a reduction in working hours, but this request was refused. He unilaterally changed his working pattern in dispute with PP and, subsequently, his company van was repossessed.

In 2011, Mr Smith brought claims for unfair dismissal, discrimination on the grounds of disability and unlawful deduction from wages for PP's failure to pay sick and holiday pay.

Employment status

A key issue was Mr Smith's employment status: whether he was an employee, a worker or genuinely self-employed. His employment status had significant implications on which claims he was able to pursue – for example, he must have been an employee to bring an unfair dismissal claim.

Through the lower courts up to the Supreme Court, it was found that Mr Smith was not an employee and therefore could not bring a claim for unfair dismissal.

Yet he was a worker and accordingly entitled to pay in line with the national minimum wage and holiday pay. This was despite his previous assertion that he was self-employed. The court's reasoning is as described in Levy McCallum Ltd v Middleton [2005]: 'If parties agree to create a horse but instead create a camel, the fact that they intended to create a horse is of little assistance in determining whether in fact it is a horse.'

Government action

In November 2017, the Business, Energy and Industrial Strategy (BEIS) Committee published a draft bill in response to the Taylor Review on employment practices.

The bill is designed to deal with the perceived unfair treatment of gig economy workers as a new category of self-employed contractors when the reality of their employment status does not reflect this.

The proposals are yet to be taken forward by the government but may appear in the next Queen's speech.

Onus on the employer

It is clear that further legislation is necessary to clarify this area of law. As emphasised by the BEIS Committee, parties should not have to rely on the tribunal system to decide issues of employment status. Clarity in the law would enable all parties to achieve their overall joint aim of working together in a mutually beneficial relationship, without wasting time and financial resources in disputes over employment status.

Yet there is a danger the pendulum may swing too far in favour of the employee/worker in this instance, as it is proposed the onus will be on the 'employer' to establish employment status.

"The more control an 'employer' has, the more likely an individual will be found to have worker or employee status"
 

The matter of employment status currently has a significant impact on 'employers' affected by these issues, in terms of HR and risk management. It also proves to be an issue for corporate transactions, as it potentially has a huge impact upon assessment of potential liabilities.

This will be the case for as long as the issue of employment status remains unclarified. The perceived higher risk may impede fluidity in the corporate transactions market to the ultimate detriment of all parties and the economy as a whole.

The courts are focusing on the issue of control over individuals carrying out work. The more control an 'employer' has over an individual, including, for example, required working hours and the provision of equipment, together with an inability to use substitutes, the more likely it is an individual will be found to have worker or employee status.

Companies should therefore take this opportunity to carry out a review of working practices within their organisation to consider what, if any, risks may be apparent within the organisation. This is clearly a significant issue for businesses built upon the new gig economy.

Disability and sickness absence

Mrs O'Connor was employed by DL Insurance Services Ltd (DLIS). It was accepted she had a disability, as a result of which she had taken around 60 days' absence in 2015–2016.

Although she was treated with some leniency, in 2016 she was given a written warning in relation to her sickness absence levels. One outcome of the warning was that DLIS's responsibility to pay her contractual sick pay was rescinded. Mrs O'Connor brought a claim under the Equality Act 2010 for discrimination arising in consequence of her disability.

DLIS averred that the decision to give Mrs O'Connor a warning and the related withdrawal of contractual sick pay was objectively justified. This was based on the fact that the warning was designed to fulfil the legitimate aims of encouraging Mrs O'Connor to improve her attendance levels and ensure adequate attendance.

However, the Employment Appeal Tribunal (EAT) identified that in this case that DLIS had not shown evidence as to how the warning would achieve the aforementioned aims. Rather, DLIS had relied upon generalisations that such warnings satisfied the aims.

They had failed to liaise internally in relation to the impact the absence had on Mrs O'Connor's work, and had not taken advice from occupational health in relation to her high level of absence – as required under their policies. 

DLIS had therefore been unable to show the application of their policy achieved the legitimate aims they had identified.

Proportionate means

Employers need to be mindful in circumstances where an employee has a disability and they need to be able to show any action taken under a sickness absence procedure is a proportionate means of achieving a legitimate aim.

Although the aims identified by DLIS were legitimate on the face of it, they had not shown the action taken against Mrs O'Connor was proportionate. Employers should be able to show evidence of discussions with the relevant individuals and that they have also explored where additional support could be offered by medical or occupational health professionals.

Although the EAT commented DLIS had provided a significant level of support to Mrs O'Connor, this was not enough to escape a finding of disability discrimination.

Sickness absence and/or capability procedures cannot and should not simply be imposed upon individuals who are known to have (or may have) a disability without fully considering the implications and risks of a potential claim for disability discrimination.

Lydia Newman is an employment solicitor

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions