The ‘Good Jobs’ Bill: Employment Status

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The ‘Good Jobs’ Employment Rights Bill public consultation is currently seeking feedback until 30 September 2024. One of the issues which forms part of the public consultation on “Good Jobs” is that of Employment Status. It is considered as part of Theme A under the topic of “Understanding Employment Status and addressing Bogus Self Employment”.

It is unsurprising that this issue is being considered as part of the consultation as the classification of a working relationship affects everyone who works and in recent years there has been significant case law in this area, at least partly due to the emergence of new working models, which do not easily fit within the existing statutory definitions. The correct classification of employment status is extremely important as the associated rights, responsibilities and obligations differ depending on status.

Under current employment law, there are three main types of employment status:

Employee;
Worker; and
Self-employed individuals or contractors.

There are statutory definitions for the first two categories. There is no statutory definition in either employment or tax law of “self-employed”, however an individual who is not considered to be an employee or worker is deemed to be self-employed for employment law purposes. Although there are statutory definitions of employee and worker, set out at Article 3 of the Employment Rights (NI) Order 1996, there has been criticism of the lack of clarity provided by these definitions and this has led to a number of high profile cases in recent years, particularly within what is known as the “gig economy”, due to the development of new technologies and working models.

In the case of Uber BV & ors v Aslam & ors [2021] UKSC 5, the Supreme Court determined that Uber drivers were workers, as opposed to self-employed/independent contractors. The Courts have made it clear that in determining status they will consider the facts of the case and the reality of the working relationship, to include the level of control exercised by the employing organisation, the right of the individual to send a substitute, the extent of integration, the extent of mutuality of obligations and any right of the individual to send a substitute, as opposed to simply looking at what has been recorded between the parties in any written contract.

The distinction in employment law between the three categories of employee, worker and self-employed is important for several reasons, which is why in the Uber BV case referred to above, this issue went as far as the Supreme Court. The differences between the three categories include the following:

Self-employed individuals or contractors have the right not be subjected to unlawful discrimination e.g. on grounds of sex where they are employed under a contract personally to execute any work.
Workers have the right not to be discriminated against unlawfully on grounds of a protected characteristic but they also have additional employment protections to include the right to receive the National Minimum/Living Wage, working time rights e.g. the right to rest breaks and paid annual leave, the right not to be subjected to unauthorised deductions from pay and the right not to be subjected to a detriment due to whistleblowing.
Employees have all of the protections afforded to those who are considered to be self-employed and workers, however they also have significant additional minimum employment rights e.g. the right to a written statement of particulars of employment, the right to maternity, adoption and paternity leave and pay, the right not to be unfairly dismissed and the right to receive a statutory redundancy payment.
Employers and employees also have obligations which are implied into the contract between them e.g. the mutual duty of trust and confidence and the duty of confidentiality.

In summary, employees have more employment rights on one hand but they also have more responsibilities towards their employer. Workers have less employment rights than employees but in return should have increased flexibility over the working relationship and those who are genuinely self-employed have no real employment rights but should have significant flexibility since they are in effect their own employment business.

If an individual is unhappy with the classification of their status, they can pursue a claim to the Office of the Industrial Tribunals and Fair Employment in order that a decision can be made as to the real nature of the relationship. Tribunal proceedings can be costly and time consuming for all parties and, as has been the case in previous claims relating to employment status, these matters can be complex and end up being determined by the appellate courts. It is therefore important to ensure that the contract between the parties reflects the true nature of the relationship in order that both parties are aware of their rights and obligations and can benefit from the protections to which they are entitled.

Whilst there are no specific proposals for Departmental action at this time, the views and evidence gathered from the consultation may lead to reform in future. Further, should the new Labour Government move forward with their previous proposal, reiterated in their “Plan to Make Work Pay”, to create a single status of worker for all but those who are genuinely self-employed, this may impact upon the decision to make legislative change here. Although employment law in Northern Ireland is a devolved matter, the laws in NI in relation to employment status have closely mirrored those in Great Britain, partly due to the close interaction in this area between tax law, which is a reserved matter, and employment law.

Should you require any information or advice in relation to the matters raised in this article, please do not hesitate to contact our Employment team.

This article has been produced for general information purposes and further advice should be sought from a professional advisor.