Last week, the Department for Business, Energy and Industrial Strategy (BEIS) published a response to its employment status consultation, designed to understand if changes to the law were required in order to ensure everyone who is entitled to key employment rights and protections has access to them.
Despite the ongoing uncertainty and insecurity that the current classifications allow for, the Government has concluded that now is not the time to make changes. This is hugely disappointing as key to supporting workers in insecure work would be to formally shift the onus on to employers to demonstrate why their workforce is not eligible for key employment rights and protections - such as sick pay, paid annual leave or the National Minimum Wage. At a time of a cost of living crisis, this could have made a real difference for some workers who are currently excluded from employment rights and entitlements.
The expansion of the gig economy has led to increasing confusion over employment status
Currently in the UK, there are two employment statuses for tax (employee and self-employed) and three employment statuses for employment rights (employee, limb b worker, and self-employed). Workers have access to many of the same employment rights as employees, such as being entitled to the minimum wage, holiday pay and sick pay, whereas self-employed people do not.
Over recent years, the expansion of the gig economy has increasingly introduced confusion around the difference between ‘workers’ and ‘self-employed’. Some employment contracts may describe an individual as operating independently, as a small business in and of itself. However, the characteristics of the relationship may only partially align with such a description, leaving doubt as the status and the rights that people should be entitled to. Those who are designated as self-employed can challenge their employment status either by discussing this directly with the employer, or by challenging their status in an Employment Tribunal. In 2016, Uber drivers did just this and, after a lengthy legal battle, in February 2021 the UK Supreme Court judged Uber drivers to be workers rather than self-employed workers.
Increasingly we have seen these situations challenged in the courts, where a number of landmark cases have secured important employment rights for the workforces involved. This has tended to be the result of judgements focussing more on the notion of ‘control’ which describes the degree to which an employer or organisation controls someone’s activities or time; and far less on the notion of ‘substitution’ – the extent to which an individual is theoretically able to give their labour to someone else.
This consultation represented a significant opportunity to extend and codify the outcomes of these judgements for all workers – an opportunity which now appears to have been missed.
Existing rules must be enforced
The Government response does at least recognise that the UK’s current system can be confusing for both individuals and employers. It has published a series of new checklists for employers and individuals to assess employment status, with a tabular overview of the rights that are associated with each employment status.
But this is unlikely to make much difference to those who find themselves shut out from key employment rights. This is especially the case for those in severely insecure work, where existing rules are still not consistently enforced in many employment settings - in 2022, Uber drivers are still not paid for the time they spend waiting for their next job.
Enforcing existing labour market rules and regulations is a well-known challenge, suffering from lack of coordination between different areas of enforcement and crucially a shortage of inspectors. To this end, we welcomed the Johnson Government’s intention to join up the patchwork of enforcement agencies into a Single Enforcement Body and were eagerly anticipating the introduction of an Employment Bill that could help bring this to life.
However, there have been many missed opportunities to bring an Employment Bill forward and it is looking high unlikely a Bill will appear in this Parliament. For now, the onus remains on individuals to assess and fight for their own employment status, so attention must now turn to meaningful reforms that can at least strengthen the hand of workers attempting to secure their rights.
First, it is vital that Government improves access to Employment Tribunals, and reduces the time and resource required for individuals to take cases to court. Second, Government must also increase resourcing for labour market enforcement to improve detection and discourage those employers who do not comply with the law.
In the context of rising inflation and a cost of living crisis that is hitting the poorest hardest, it has never been more important for all UK workers to be able to access key employment rights and protections.
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