Employment

Brexit stalls reform on the status of the ‘self-employed’
7 December, 2017

In our previous blog discussing the outcome of the 2018 Budget, we highlighted the Government’s proposal to reform issues surrounding worker status, particularly within the gig economy.

 

The media reports, however, that any reform to the legislation surrounding worker status will be delayed due to Brexit negotiations taking priority over domestic policy reviews. As a result of the delay, disgruntled ‘self employed’ workers will have to wait to receive possible enhanced worker rights.

 

This does not mean employers can afford to sit back and relax presuming their business will not be affected; the on-going high profile cases in the media, such as Jess Varnish and Uber, will still encourage self employed workers to pursue their own claim for enhanced employment rights. It is apparent that changes to legislation are on the horizon, so now is an appropriate time for your business to review its employment practices and status of staff.

 

Please contact Emma.saunders@cripps.co.uk if you would like advice.


Have a Break, Have 13 years’ worth of untaken holiday!
30 November, 2017

Do you hire self-employed staff? If your staff are classed as ‘self-employed’ but it is found that they are in fact ‘workers’ – as increasing numbers of ‘gig-economy’ companies are realising – you may be at risk of a large holiday pay bill dating back 20 years, as staff may be entitled to all their back dated holiday pay and unused annual leave.

 

The European Court of Justice has ruled that Mr King, who worked as a commission based salesman between 1999 and 2012, was incorrectly classed as ‘self-employed’ rather than a ‘worker’. ‘Workers’ are entitled to a number of employment rights including holiday pay, the national minimum wage, and sick pay.

 

The Court determined that an employer that does not allow a worker to exercise his right to paid annual leave must bear the consequences. In practice, the effect of this ruling is that a worker could claim for the period from 1996, (when the original Working Time Directive came into force) until they leave the company, assuming he or she was a worker for the duration of that period.

 

This case also clarifies that workers who are denied their entitlement under the Working Time Regulations to paid annual leave do not have to take a period of unpaid leave first before taking legal action to receive pay for that leave.

 

There will be more clarity on the extent of employers’ holiday pay obligations when the case returns to the Court of Appeal, however, companies operating within the ‘gig-economy’ must carefully review their existing arrangements. With such a potentially significant payment on the table, the incentive for staff to question their employment status will now be much larger. If you have any doubt as to the status of your staff and are concerned about potential liabilities, contact Rhona.darbyshire@cripps.co.uk.


National Wages rise… the Budget revealed
24 November, 2017

The government released the 2017 Autumn Budget this week, which included a few changes that will affect employers and employees.

Wages

The national minimum wage (NMW) and national living wage (NLW) will increase from April 2018.

The NLW, which applies to workers aged 25 and over, will increase by 4% from £7.50 to £7.83.

The NMW rates will be increased as follows:

 

Age

Current NMW rate

NMW from April 2018

21 – 24

£7.05

£7.38

18 – 20

£5.60

£5.90

16 and 17

£4.05

£4.20

Apprentices

£3.50

£3.70


Tax

In the 2018/19 tax year, the ‘personal allowance’ will be increased to £11,850 and the ‘higher rate threshold’ will be increased to £46,350.

With effect from April 2018, employers who provide charge for employees’ electric vehicles will not incur any benefit in kind charges for such electricity. Separately, the ‘Diesel Supplement’, used where the employer provides the employee with a diesel car which is available for private use, will increase from 3% to 4%.

The government will make several changes to the taxation of employee expenses:

  • Self-funded training – the government will consult in 2018 on extending the scope of tax relief for employees and the self-employed in relation to work-related training costs.
  • Subsistence benchmark scale rates will be relaxed from April 2019.
  • Guidance on the claims process for employee expenses (particularly travel and subsistence) will be improved.

 

Employment status

The government has acknowledged the complexity surrounding employment status in the field of employment rights and tax. Accordingly, the government will publish a discussion paper exploring the options for longer-term reform in order to make employment status tests for both employment rights and tax clearer.

If you’d like to know more about this topic, see our recent blogs  Employment Status: Modern day gladiators are independent contractors…or are they? and Worker status and the ‘gig economy’: Taxi for Uber?


Employment Status: Modern day gladiators are independent contractors…or are they?
16 November, 2017

Are your staff correctly classified as independent contractors or employees? It seems that even governing bodies like UK Sport and British Cycling may be getting it wrong. 

For many the Olympics are the sporting pinnacle, the event where the best athletes perform in front of the biggest audiences.

It is widely accepted that in a performance driven environment tough calls on selection need to be made.

>>> Worker status – the plot thickens 

However, the much publicised case of former Olympic track cyclist Jess Varnish has raised big questions over the merits of the decision to drop her from the British Cycling Olympic podium programme (see Background).

Next Steps

Despite the best efforts of British Cycling and UK Sport, a preliminary employment hearing has been scheduled for April 2018 to consider whether Varnish was in fact an employee of British Cycling and UK Sport.

PR Disaster

Varnish’s claims centre around allegations of a working culture of bullying and discrimination.

>>> Equal pay in sport, an achievable goal or impossible dream?

In such circumstances it is a bit of another PR disaster when a court determines that you have been heavy handed, and ‘overly aggressive’, when making applications for Varnish’s case to be dismissed, and for a costs and deposit order against Varnish.  

If the costs and deposit orders had been successful Varnish’s assets would have been frozen, in short she would not have been able to fund her case.

It comes across as if British Cycling and UK Sport were using their comparative economic strength to silence Varnish.

Employment Status

Varnish is bringing claims related to whistleblowing, victimisation, and unfair dismissal. However, the far more wide reaching consideration is whether or not she and other athletes funded by UK Sport are independent contractors or employees?!

>>>  Worker status and the gig-economy – Taxi for Uber? 

Employees have significantly more rights than independent contractors, such as unfair dismissal protection and the right to engage with grievance procedures – which along with a lack of a whistleblowing procedure was one of the main contentions and concerns stated by Varnish.

Although the above may be concerning, the far bigger concern for UK Sport, as well as other sporting institutions (and most other entities involved in the gig-economy in such an instance)  is going to the economic implications.

At present because athletes are not treated as members of staff, UK Sport and British Cycling are not required to pay NMW, pension contributions and national insurance contributions.

This could all be about to change, shortly followed by review of the funding of athletes ….

Background

Having been dropped by British Cycling (her contract on the Olympic podium programme was not renewed) on the claimed grounds of performance criteria, Varnish challenged the decision and made serious allegations against her former coach Shane Sutton (who resigned and is now coaching the Chinese track cycling team).

Her claims included that he told her ‘to go and have a baby’ as well as saying she was too old. Sutton denied the claims.

An independent review was carried out, but the result did little to appease or please anyone involved. As a result, Varnish indicated she was considering legal action.

If you require any employment law advice, please feel free to contact Chris Hovenden on 01732 224 166 or chris.hovenden@cripps.co.uk      


Worker status and the ‘gig economy’: Taxi for Uber?
10 November, 2017

Uber drivers are ‘workers’ and entitled to NMW along with other worker rights, says the Employment Appeal Tribunal as it upholds the Employment Tribunal’s original decision. 

Big news

The impact of this decision is not just limited to Uber – it will have significant ramifications across the ‘gig economy’ and further raises the classic question ‘is an individual an independent contractor, worker, or employee?’

>>> Worker status: plot thickens (Pimlico Plumbers)

Uber’s business model, alongside many other companies in the ‘gig economy’, relies on its staff being ‘self-employed’ primarily so that it can reduce costs and its responsibilities towards them.

Self-employed?

Self-employed individuals  have very limited rights on the basis they are viewed as being a business in their own right.

In contrast, although not enjoying the same level of protection as employees, ‘workers’ are entitled to certain benefits including NMW, holiday and sick pay.

>>>New destinations: employment status (Uber)

Here lies the problem for Uber and its fellow ‘gig economy’ business models.

If their staff are ‘workers’ and are entitled to receive NMW for the hours they work (along with other required benefits) the operational costs of the business may increase sharply making the existing business structure unsustainable.

Gig economy

The employment landscape has changed dramatically in recent years, with it claimed that nearly 25% of people currently in work are classed as ‘self-employed’.

Whilst there are obvious benefits to self-employment such as flexibility, the wide-spread concern is that some companies may be exploiting individuals.

This view is reflected by recent decisions in the employment tribunal and the government’s review of modern working practices.

What next?

It is very likely Uber will appeal the EAT’s decision, which along with other high-profile cases like Pimlico Plumbers, and more recently the expected challenge by elite cyclist Jess Varnish against UK Sport and British Cycling that she was an employee, means the topic of employment status is not going away any time soon.

In short, watch this space.

If you require any employment law advice, please feel free to contact Chris Hovenden on 01732 224 166 or chris.hovenden@cripps.co.uk          


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