Uber end of road for consultants

Has Uber unwittingly crashed the car for all consultants…

Consultants and employers who use them – don’t panic. The Uber decision, in the case of Aslam & others -V- Uber BV Central London Employment Tribunal 2016, has not driven a coach and horses through the law separating employees from workers and consultants. The decision is ‘fact sensitive’ – based on the particular facts of the case.

Uber - not driven a coach and horses through laws on consultants

Uber – not driven a coach and horses through laws on consultants

Who is an employee, worker or consultant

First, it is important to understand the differences between an employee, worker and consultant. Each of these categories of persons enjoy different levels of benefit from employment legislation.

An employee has the greatest protection from employment legislation, a worker has less protection and a consultant less still. It’s all downhill starting from the employee. Hence why many workers seek to climb the hill to employee status.

An employee will work under a contract of employment and will benefit from the right not to be unfairly dismissed, under S94(1) Employment Rights Act 1996 (ERA), after continuous service of two years.

A worker will never acquire the right not to be unfairly dismissed, but will nonetheless enjoy some of the rights enjoyed by employees such as the right to paid holidays and the right not to suffer unlawful deductions from wages (S13 ERA).

Number of tests

So what type of person performing work falls into the category of employee, worker or consultant? The law has been grappling with this question since the days of the coach and horses. To answer this question, case law has devised a number of tests which they apply to the working relationship to determine whether the person performing the work is an employee, worker or consultant.

Control test

The court asks whether the employer has sufficient control over the person performing work to order how the work is done, what work is done, where it is done and when it is done. If this degree of control exists, the person performing the work is likely to be an employee. If a lesser degree of control exists, the person performing the work may still be a worker like in the Uber case.

Are consultants obliged to do work for the bosses?

Are consultants obliged to do work for the bosses?

 

Mutuality of obligation

Under this test the employer must be obligated to provide the person performing the work with the work and the person performing the work must be under an obligation to accept and perform the work. If there is mutuality of obligation, the person performing the work is likely to be an employee.

Personal performance

One of the hallmarks of an employer/employee relationship is that the person performing the work must do so personally. The employee should not have a right of substitution, whereby they can send another person to perform their work.

Form over substance

Whilst the written contract between the parties is important, it is not determinative of whether the person performing the work is an employee, worker or consultant. The Employment Tribunals will look to the substance of the relationship rather than form.

So what is all the fuss about? A consultant would be considered to be in business in his own right and would not enjoy any of the employment benefits of employees or workers. An example of a consultant or contractor would be the plumber who fixes the boiler. A benefit of being a consultant would be that he can set his expenses of going to work against the money he receives for the work. Of course, employees cannot recover the cost of going to and from work against income tax.

Whilst many people would prefer to be consultants, and their employers would also prefer this arrangement for it saves on the employer’s national insurance contributions, HMRC likes to see the reverse. Add to this that, the courts and now Employment Tribunals have been raining on this parade since the horse and carriage. It’s vital employers and employees/workers/consultants get it right.

To guide you through this maze contact Sharma Solicitors.

 

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