The recent decision to cement the legal status of Uber’s so-called self-employed drivers as employees may also be relevant to the property and construction industries, which often engage workers on a self-employed or agency basis.

Sybille Steiner

Although Employment Tribunal decisions do not bind judges in other Employment Tribunal cases, the Uber case is very important because it is the first case that has considered the employment status of people who work in the rapidly growing ‘gig economy’.

It’s often a central aspect of these companies’ business models that the people who provide the end service are self-employed.

The rights of self-employed individuals are governed strictly by the contractual terms they agree with their ‘employer’. Businesses engaging individuals on a self-employed basis are under no obligation to pay minimum rates of pay, holiday pay or enrol these individuals in a pension scheme.

Crucially, ‘workers’ do have these rights. Workers are a legally defined group that sit somewhere between ‘employees’ and the ‘self-employed’.

Builders

The ruling will have given some fresh food for thought - Source: Shutterstock/Dmitry Kalinovsky

Part of the problem is that there is not a great deal of legal certainty, so courts and tribunals will go through a number of factors to determine whether the individual is self-employed, a worker, or even an employee with full employment rights.

A common issue

The use of self-employed workers in the property industry, particularly in construction, is common. Issues surrounding this have been widely reported as the industry is said by some to be avoiding paying millions of pounds in tax while depriving workers of their rights by using a self-employed status.

So, what do Uber drivers have in common with construction workers? Nothing, on one level, but the tribunal did make a number of relevant findings.

An uber cab parked in the street

The landmark Uber case could have major implications for the property sector - Source: Alper Çugun/Flickr

The tribunal looked at the reality of the drivers’ working relationship with Uber and also how it marketed itself as a transportation business. The central question in the Uber case was one of control.

The more autonomous the individual is, the more likely they are to be self-employed. Uber drivers were not autonomous and were subject to detailed rules and obligations. If they didn’t follow these they were “deactivated” (in Uber speak).

This picture bears similarity to individuals in the property and construction industry. Individuals are often labelled ‘self-employed’, yet in practice they are required to turn up on site at a certain time, stay until a certain time and follow directions from the foreman.

These conditions suggest they are workers, not self-employed. It is also important to recognise that even if HMRC treats a worker as self-employed, a tribunal can reach a different decision.

Simply agreeing an individual is ‘self-employed’ will not protect a company

The government has now established a unit within HMRC, called the employment status and intermediaries team, to investigate compliance by companies in providing the correct employment rights, status, and benefits to their workers. UCATT, the union for workers in the construction sector, has called on the unit to focus on the construction industry and ‘false self-employment’.

How is status worked out?

Companies should note that when determining an individual’s employment status, the true reality of the working relationship will be the primary focus. As is evident from the Uber case, simply agreeing that an individual is ‘self-employed’ will not protect a company.

When establishing an individual’s status the key considerations will be:

  • Mutuality of obligation - is the employer under an obligation to offer work and is the individual under an obligation to accept it?
  • Control - can the employer tell the individual how and when to do the work?
  • Integration - is the individual part of, or leading, a team? Are they part of the employer’s internal organisational matters (including training and meetings)?
  • Economic reality - does it look like the individual is self-employed? Do they provide their own tools? Do they work for a number of clients? Are they responsible for the profit and loss of their business?

The property and construction industry currently benefits greatly from the engagement of agency workers - it is estimated that more than 350,000 people work in purported self-employed roles within the sector.

The Uber decision is therefore hugely significant as any permanent change to the classification of workers will impact on business models and have a knock-on effect in terms of cost implications for building schemes, redevelopment and demolition projects. The industry should stay abreast of the legal developments and ensure that when engaging individuals and determining employment status it is mindful of these key considerations.

Sybille Steiner is a partner in the employment team at Irwin Mitchell

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