“Holidays are coming…”

19 December 2017

For more information:
Caroline Carr
Partner
E: cac@bto.co.uk
T: 0141 221 8012

As 2017 draws to an end, it’s time to reflect on what has been another busy and momentous year in the field of employment law.

The ‘big one’ from a social justice perspective was the end of Employment Tribunal fees which acted as a barrier to individuals seeking to pursue their workplace rights. At the same time, another hot topic is the developing area of the ‘gig-economy’ whose profile has continued to rise throughout 2017, with a number of court rulings affecting organisations such as Uber and Deliveroo, considering whether certain individuals are entitled to the legal protections given to “workers”.

This is an area that could have massive implications for businesses (and individuals) and is certainly one that has grabbed our attention.

By way of a quick recap, there are generally three categories of individuals who are engaged in work in the UK: ‘employees’, ‘workers’ (who may sometimes be described by the parties as “self-employed”) and genuinely self-employed individuals who are not workers. These individuals have varying workplace rights depending on that status:

Employees work under a contract of employment and enjoy a number of employment rights and protections, including the right not to be unfairly dismissed and redundancy rights, as well as entitlement to holiday pay and protection from discrimination.
Workers will have a contract to work personally for another party, although the relationship will not bear the hallmarks of employment. They have fewer rights, and do not, for example, have the right to claim unfair dismissal. However, workers are entitled to paid holidays, are entitled to rest breaks etc. and have the right not to suffer discrimination. They are also likely to be covered by the TUPE Regulations.

This is a tricky area and one where businesses could run into costly difficulties, particularly where they seek to maintain that an individual is ‘self-employed’ or a ‘consultant’ or ‘contactor’, and that does not reflect the reality of the true working relationship. A tribunal or court will look at the reality of the relationship and not the name given to it by the parties. It is this battleground - self-employed status v worker status - that has been the subject of recent high profile litigation, and several of these cases are proceeding to the Supreme Court given the importance to the companies concerned and the cost implications if the individuals are found to be workers. In particular, the cost of providing 5.6 weeks paid annual leave under the Working Time Regulations is very significant.

This has been brought into sharper focus by a recent ruling of the European Court of Justice which held that a worker is entitled to be paid on termination of the engagement, for any periods of annual leave that have accrued during the engagement, where the worker has been discouraged from taking that leave because it would have been unpaid. This again could have massive implications for businesses (and individuals) where workers have been erroneously classed by the business as ‘self-employed’ or as independent contractors or consultants, and denied holiday pay. Potentially, entitlement to paid annual leave will have accrued year by year and, whatever the length of the engagement, the worker could claim compensation for this, backdated at the end of the engagement. If this entitlement has built up over a number of years, this could be a significant sum, which could leave businesses facing very substantial holiday pay bills.

Keep an eye out for our regular blogs throughout 2018, for updates on this and other employment law topics, and add us to your favourites.

Caroline Carr, Partner