Let’s Complicate Employment Laws Even More…

The clamour to argue for reform of employment law was joined today by a joint report from the Work and Pensions & Business, Energy and Industrial Strategy Commons Committees.

But this report seems muddled, and was perhaps published simply to join the voices already calling for change, rather than because its arguments are warranted. If adopted, its recommendations would only add to the confusion, rather than help clear up the status of workers/employees or those that work for themselves.

 

Worker by Default

 

As part of its recommendations, the report calls for an assumption to be made that a appellant to an employment tribunal is presumed to be a worker unless the contrary is established.

This doesn’t appear to add any benefit to the procedures, only bloat out the already-huge piece of legislation that is the Employment Rights Act 1996. Even without this addition to the legislation, a tribunal would need to determine the employment status of an applicant, and there’s no suggestion that a tribunal ever delivers a neutral finding in such cases, simply accepting the status quo or a favourable argument for the employer. Therefore, it’s not clear why any assumption would help – the parties would still need to present evidence to support their arguments about the real employment status, and the tribunal would still have to weigh these up and make a decision.

Furthermore (as is the case for many cases currently considered in the gig economy), if someone is being treated as self-employed rather than a worker, giving them a preferred or assumed status would not have changed anything in the cases the Committees cite in their report – the employment tribunals have already found the applicants to be workers, so nothing would have been gained by having had the suggested new legislation.

 

(There is one exception to this: Deliveroo riders. But as the case wasn’t considered by an employment tribunal, the proposed Section 1ZB of the Employment Rights Act 1996 wouldn’t help in the Deliveroo case – see below; there are no cited cases in the report of Deliveroo in the employment tribunals.)

 

An associated proposal, without any supporting draft legislation, suggests creating a legal definition of self-employment (paragraph 14). Rather than assist employees, workers, and those using the services of the self-employed, this is likely to add to the confusion, require ever more case law: there is no simple definition of self-employed/worker/employee, and trying to define all three clearly in legislation will only leave more cracks for someone to fall through, invite more imagination for employment lawyers to define terms of engagement, and encourage further use of employment tribunals to determine the real definition.

How would this assumption of worker status even work in practice with your privately hired cleaner/gardener/window cleaner, etc? Could a 2-hour per week cleaner take a householder to a tribunal, adopt an assumed-until-proved-otherwise status of worker, with the assumption that they’re due holiday pay & other workers’ rights?

 

Class Action

The suggestion for class action is not a terrible one in principal, but without any obvious justification in practice.

The idea is that if a few claimants (as there are with the current Uber & Pimlico Plumbers claims), any ruling would apply to everyone in the same position, even if they weren’t party to the original claim to the tribunal. But isn’t this likely anyway, in some form?

If Uber or Pimlico Plumbers were to lose their respective cases in the Supreme Court, is it expected that they would operate two tiers of relationship, based solely on whether someone brings an employment tribunal claim?

Or in practice, is any “gig economy” employer more likely to simply offer two alternative relationships, based on the preference of the individual? If one individual breaks ranks, tries to challenge a status in a tribunal, they could simply be offered terms under the alternative status, and the case may never be tested.

 

Perhaps given a worker doesn’t have any rights to protection of employment, Uber or others could simply deny anyone claiming worker status future access to the app or whatever means they have of assigning work, and if a worker seeks to enforce rights as a worker, they have the benefit of a worker without any future work.

Class action will only encourage the employers to find more elaborate means to engage people, find alternative ways of sharing out the various tasks of finding customers & assigning someone to deliver the service. And encouraging more case law in the process.

 

Divergent judgments on worker status

In a Comment article in The Times today [an article behind a paywall], the Committee Chairs Rachel Reeves & Frank Field suggested that “divergent judgments on worker status involving Uber and Deliveroo show an urgent need for legal clarity”.

This is a very unreasonable interpretation of recent judgments, as it’s not only comparing apples with pears (Uber’s and Deliveroo’s respective terms of engagement are not the same, they have many different features for each of the contracteers working for them), but the judgments diverge as much due to being considered in entirely different types of cases, for different purposes, and based on entirely different legislation – which leads to a whole new question.

 

The Uber case was recently determined at the Employment Appeal Tribunals, and this upheld a judgment that the applicants were workers for the purposes of the Employment Rights Act, thus entitled to some rights including holiday pay & minimum wage.

 

The Deliveroo case was determined at something called the “Central Arbitration Committee” (CAC), and this considered an entirely different piece of legislation, in a case aimed at determining whether Deliveroo should recognise a trade union. Even if this case did determine that Deliveroo’s riders were workers for the purposes of its judgment, this would have changed nothing for the purposes of their status for most employment law purposes (and wouldn’t have been binding on employment tribunals either).

The report suggests harmonising provisions are needed for section 296, Trade Union and Labour Relations (Consolidation) Act 1992 (TULRA) (this is the law under which the Deliveroo case was decided); section 54, National Minimum Wage Act 1996, and other laws.

This would create complications of its own: the Deliveroo case was not primarily determining whether any individual was a worker, let alone considering it within the definition of the Employment Rights Act (although the CAC did find that the Deliveroo riders were not workers in accordance with 230, ERA – the test that is currently being considered in various proceedings for Uber and Pimlico Plumbers) but rather whether a group of its delivery contractors were respectively workers according to section 296, TULRA. (The purpose of this action was solely to decide whether Deliveroo should be required to recognise a trade union; no individual would have obtained a recognised “worker” status in accordance with the ERA, even if the ruling went in favour of the riders.)

The CAC found that the riders – those that undertake to deliver for Deliveroo – were not workers for either the purposes of s296, or s230, ERA. While the CAC did not try to determine the reasons for the subtly different tests that would apply for these differently drafted pieces of law, it noted that a rider could send a substitute to make the delivery – there was a freedom to substitute.

This was a key difference with Uber, where substitution is not possible. However, Uber claim they do not restrict the right to arrange a substitute driver simply as part of their own control – which would lean the argument towards worker, away from self-employed – but say they adopt this policy due to licensing law for identified drivers of private hire vehicles.

Whatever way you read these judgments though, this does not create a contradiction or divergent judgments. The cases respectively had material differences – including the right of substitution. Comparing them is like comparing apples with pears – or even carrots & bananas.

Notwithstanding that, employment tribunals are currently able to reach divergent judgments, and have been since they were first established – a judgment of an employment tribunal is not binding on another employment tribunal. Ergo, it’s perfectly possible for two employment tribunals to reach entirely different decisions based on the same facts, so unless the judicial system is revised as part of this, divergent judgments can & will always be possible. This hasn’t been an issue in the 50+ years that employment tribunals have existed, and the gig economy, while producing new challenges for the capable judges & lay members that sit on tribunals, doesn’t justify assisting them with poorly-drafted legislation now.

 

Minimum Wage

The report recommends some form of trial for “workers” who work non-contracted hours – the intention being some operatives in the “gig economy”.  While the legislation (the Employment Rights Act) would assume a worker status by default when a complaint is made to an employment tribunal, if the parties agree (as they often do now) that they are operating in a contractor/contractee (self-employed) relationship, this wouldn’t change the test for “worker” status when it comes to the minimum wage – the default assumed worker status would only apply in employment tribunals, not necessarily for those it recommends might be defined as workers.

 

Cohesion With Tax

If the laws are fragmented enough within employment law, they only get more fragmented when tax comes into the picture. And this report fails to address, or make any suggestions, here at all.

Although not too common, it’s possible that tax & employment laws apply their respective prevailing legislation in such a manner that someone would be deemed a worker/employee for employment law purposes, but self-employed for tax purposes, or vice versa.

Under the proposals of the report, even the self-employed could be deemed a worker by default (for employment law purposes, but not tax purposes), and a tribunal could even find the status to be employee. Yet the tax man would not expect tax to be deducted at source, treating income of a worker as self-employed.

 

Conclusion

 As the report finds, employment law is complicated.

Despite the best efforts of this joint report, it appears though that tinkering with employment law is not going to help, it’s only going to add more confusion, invite more case law, and more case law on that to determine when any case law should or shouldn’t apply.

Unless or until parliament is in a position to completely review (& perhaps consolidate as part of the process) all current employment law, maybe it would be better for select committees, employers, employees, and workers or those seeking to claim they have worker status to leave the tribunals & courts to do what they do best: determine each case, and apply or determine case law based on the current laws.

Politically for some, that may not have too much attraction. It would at least provide some stability on employment law, and the Supreme Court’s judgment (expected early next year) may well provide case law that will absolve any need for further legislation.

Filed under: General News by Employment Law Clinic           Post created on: November 20th, 2017