Employment Status Under Review: Time for Reform?

Following our recent blogs on the tribunal claims raised against Uber and Citysprint, employment status in the ‘gig-economy’ is still a hot topic. The rise in tribunal claims regarding this type of work has brought these arrangements under scrutiny and the Department for Business Innovations and Skills has today (17 Feb 2017) published its review into employment status in the UK.

This review looks at the current system of how employment status is determined and how this may need to change going forward. Currently employment status is established depending on whether a person is working under a contract of employment. This is often a complicated question requiring consideration of a vast number of practical factors. The report states that since there has been a rise in the number of alternative types of work being offered by employers, the line has now been blurred when it comes to employment status.

The report makes the observation that a number of key terms regarding employment status, such as ‘self-employment’ and ‘volunteer’, do not have a clear legal definition. This lack of certainty can result in some individuals being uncertain as to their status and where they stand in terms of the rights that they have when at work. The report suggests that in some instances these individuals will then be reluctant to claim even basic rights because of this uncertainty.

A number of potential options for reform are put forward. One profound change suggested is to create a new statutory presumption that all people working in the UK are entitled to a full range of employment rights. If this presumption was made, the legislation could then differentiate other types of employment that are not to be afforded the full range of rights. This would allow for greater clarity surrounding the rights on offer to people who work within the UK. This option does seem a very big step away from the current system and would require years of development before it could be put into place and would be very complex to implement. While a benefit of this option would be the greater clarity individuals had on the rights available to them, employers may become liable for a number of additional obligations towards their workforce which, under the present system, they (lawfully) do not have to meet.

Another option presented is an examination of whether a distinction between an “employee” and “worker” is still required at all. Many trade unions have wanted to abolish this distinction in the past because of the two tiered system of rights it creates.

Suggestions are also made that other types of employment status could be clearer and legislation could be put in place to define terms such as self-employment, volunteer, the meaning of continuous employment, contractors and directors.

The current framework on employment status, on the whole, has been able to keep up with the changing types of work carried out by workers and in most cases employees are aware of their employment status. However the report does suggest that with increasing alternative employment options, clarity in the law may be needed to keep up with the latest trends. Although reform is a potential way forward, it is likely that new legislation may end up causing more problems than it would solve regarding status. Another review is due to be published later this year which may shed more light on the potential way forward regarding employment status.

In the meantime, it is apparent that employment status will continue to be challenged by individuals in the tribunals which may in turn have an impact on the businesses that operate in the ‘gig-economy’. An appeal has now been made by Uber in their case and the decision of the Employment Appeal Tribunal will be eagerly awaited in the hope that more clarity will be provided on the status of individuals working in the ‘gig-economy’.