With the recent decision handed down in Bandi and others v Bolt, the issue of the employment rights of gig economy workers is once again in the news.
But questions over employment status aren’t confined to drivers; it’s an issue that all employers need to know about, to make sure they are engaging those working for, or with, them on a contract that accurately reflects the legal position of their employment.
In this feature, we are highlighting the ways in which employers can determine it.
Background
The Office for National Statistics estimates that for January–March 2024, around one million people were on zero-hours contracts in their main job (3.1% of all people in employment). It also found that the number of people on zero-hours contracts has increased overall since 2000, by around 800,000. In 2023, the CIPD estimated that just under half a million people were employed in the gig economy (1.4% of total employment).
The difference between workers and employees
There are three main categories of employment status:
- employees, hired directly by the organisation
- workers (e.g. casual, agency or freelance workers, performing services personally for the organisation)
- the self-employed (e.g. contractors).
Employment status affects employment rights, tax and National Insurance liabilities, alongside liability for accidents and loss caused by the conduct of an individual, which are just some of the reasons why getting status right is so important.
Practically, the dividing line between employee and worker can often be blurred. One of the reasons for this was highlighted in the CIPD 2021 report Zero-hours Contracts: Evolution and Current Status, in which it said that “[T]here is also evidence that the working patterns of some zero-hours workers in reality vary little each week in terms and days worked”.
These different groups have different levels of employment rights, as summarised below.
| Employment right | Employees | Workers |
| Annual leave | X | X |
| National Minimum Wage and National Living Wage | X | X |
| Protection from wage deductions | X | X |
| Whistleblowing rights | X | X |
| Working time (breaks, etc) | X | X |
| Part-time worker rights | X | X |
| Written particulars of employment | X | X |
| Protection from discrimination | X | X |
| Family-related leave | X | |
| Flexible working | X | |
| Unpaid parental leave | X | |
| Unpaid time off for dependants | X | |
| Unfair dismissal | X | |
| Redundancy pay | X | |
| Notice periods | X | |
| Protection from dismissal during a business transfer or service provision change | X | |
| Fixed-term employee rights | X |
Determining employment status
This is a question of fact for each employment tribunal (ET) to determine, based on the circumstances of the case. Following a number of high-profile cases on the issue, such as Uber BV v Aslam and Autoclenz Ltd v Belcher, the reality of the situation, as well as the contractual terms, must be considered when determining status, as one does not always reflect the other.
There are several factors to be considered when deciding on the most appropriate status for an individual undertaking work. The most important of these are set out below.
Mutuality of obligation
Mutuality of obligation is where the employer is obliged to provide work to the individual and the individual is obliged to accept the work when offered. Where this is the case, the individual is likely to be an employee. Contracts that do not include mutuality of obligation offer a greater degree of flexibility, such as zero-hours or casual agreements. In these cases, the employer is not required to offer work to the individual when it becomes available and when work is offered to the individual, they are not obliged to accept it. This allows the business to control staff levels subject to fluctuating demand, whilst allowing the worker to perform work for other organisations or manage their work around other commitments.
Control
This looks at the balance of power between the parties in the relationship.
Generally, employers will operate control over:
- the terms of the contract
- the place of work
- working hours and days of work
- the way work is carried out
- the rules relating to the work, such as disciplinary and performance rules.
Self-employed individuals are likely to be able to control their hours and days of work, whilst not being subject to employee controls or employer supervision.
Where control is high within the relationship, it is likely the individual will not be working in business on their own account, nor be classed as self-employed.
The Supreme Court, in Uber v Aslam, highlights this.
The fact that the contract terms under which the drivers provided their services were imposed by Uber without the ability to negotiate was key in its findings that the drivers were not in business on their own account. Added to that was the fact that Uber exercised significant control over the way in which drivers delivered their services, including using a ratings system whereby passengers are asked to rate the driver after each trip; any driver failing to maintain a required average rating can have their relationship with Uber terminated.
Personal service
In most cases, for there to be a contract of employment, there has to be a requirement on the individual to provide services personally and not substitute personal performance with another.
The Bolt case
From 2019–July 2022, Bolt operated under what it called an agency arrangement, under which Bolt managed a passenger’s booking request, payment collection and processed services to the driver. It also handled invoicing arrangements
and retained a commission payment accordingly.
This was changed in August 2022 to a “principal model”. Under this, Bolt accepts the booking request from passengers and receives the fare, and then contracts with and pays a journey fee to the driver.
It was argued by Bolt that under either system, the drivers are independent contractors in business on their own account. However, the Employment Tribunal found that they were workers. This was because:
- the drivers undertook work personally — they were not permitted to pass any task to any substitute
- whilst the drivers were free to reject or cancel trips, this did not affect their obligation of personal service in respect of trips that they did accept and undertake.
The Employment Tribunal said that the drivers could not be characterised as a business, nor could Bolt be characterised as the driver’s customer. “The business was Bolt’s and the transaction between it and the driver was its purchase of the driver’s labour, strictly on its ‘take it or leave it’ terms.”
The Employment Tribunal rejected Bolt’s argument that the way it operated its pricing favoured its argument that Bolt was the client/customer of the driver, because it said that a person running a professional practice or business can dictate the terms on which their goods or services are offered. The drivers had no such freedom because their remuneration is strictly on Bolt’s terms.
For the above reasons, the application of control and the personal services test showed that the drivers were workers.
Future reforms
Alongside the Employment Rights Bill, the Government has made a number of other commitments to legal reform. One of those is to combine the categories of “employee” and “worker”, and it is expected that public consultation into this will happen in 2025.
Combining the two categories is bound to have an effect on the current separation of rights and it could well mean that those that are classed as workers could gain a considerable amount of rights which they do not currently have.
Source www.croneri.co.uk all rights recognised.