Many of you will have heard that last week an employment tribunal ruled that two Uber taxi drivers were declared to be workers rather than self-employed contractors. With 40,000 Uber drivers now operating in the UK, this was a much anticipated decision around the country. But why?
What is a worker?
The difference between a worker and an employee is often confusing. All employees are workers, but not all workers are employees. An employee is subject to an employment contract which requires an employee to work, but also requires an employer to find that employee work. A worker is subject to a contract that requires them to work, however the business is not necessarily obliged to find them work. Take for example a zero-hours contract. Someone under a zero-hours contract would be a worker, but not an employee. The worker is obliged to work when asked to, but the business is not obliged to provide that work if it is not there. The difference between the two status can have serious consequences on the rights of the individual.
How does this compare with a self-employed contractor?
There is a third possible employment status, a self-employed contractor. A self-employed contractor will often be subject to an agreement, but this will require a job to be done, as opposed to offering hours of work. The way in which contractors carry out jobs, and the tools they use to do them, will be entirely up to the contractors. A self-employed contractor will be paid per job, as opposed to being paid monthly. They are not entitled to the same protection as workers.
Why is the status important?
It is easy to see how the boundaries between each status can be a minefield for employers and employment lawyers. It is not as simple as looking at the contract or agreement. Many contractual terms can be implied from how the contract is carried out, just to complicate matters further. The fact that Uber drivers were declared to be ‘workers’ entitles them to a number of rights to which they were not previously entitled.
What are the 5 key differences in how each is treated?
- A worker is entitled to receive paid annual leave. A contractor is not.
- A worker is entitled to rest breaks. A contractor is responsible for achieving their goal in the agreed time period.
- A worker is entitled to national minimum wage for the hours he or she works. Again, a contractor is paid the agreed price for the agreed work.
- A worker is protected by discrimination in the workplace and can raise an action in the employment tribunal. A contractor may raise a claim for harassment in the civil courts, but not in an employment tribunal.
- A worker is entitled to be auto-enrolled into the company pension scheme. A contractor is not.
It is clear therefor that a worker receives substantially greater protection in the workplace than someone who is self-employed. This is why the Uber drivers wanted to contest their status in the employment tribunal. What is also clear from the case is that the boundaries between the two are often blurred by a number of different circumstances. If you are unsure about the employment status of the people in your workplace it would be sensible to seek clarification from an employment solicitor.