The Taylor Review was launched by the government following employment tribunal claims brought by individuals working in the ‘gig economy’, which gave rise to significant media scrutiny of the arrangements that purported to offer flexibility and engage the self-employed.

The Review examines modern working practices in the UK and specifically focuses on issues related to employment status, making recommendations which appear aspirational and would require a substantial amount of legislative change if they were implemented.

Readers may associate the gig economy with delivery-based businesses, but should not dismiss the Taylor Review as irrelevant to the pharmacy sector more widely. Often, a pharmacy business will use a locum on a semi-regular basis, and may even come to rely on them on an ongoing basis. The question then arises – what is their employment status?

Are they legitimately self-employed or have they transitioned into an employee over time? It is important to ensure that all staff are correctly categorised as employees, workers or self-employed as each status attracts different rights and obligations.

The Review is concerned that “fair and decent” work is rewarded rather than exploited and tries to balance the need to preserve flexibility with access to employment protections and rights. One key recommendation of the Taylor Review is to rename the “worker” category as “dependent contractors” and to recast the definition.

It has been suggested that the dependent contractor test should have less emphasis on personal service and place greater importance on control than is currently the case for assessing a “worker”.

Determining employment status

Employment status is determined by considering a variety of factors, including the label applied by the parties (for example, “employee”, “self-employed” or “locum”). Pharmacies will often engage a locum on a self-employed basis at the outset but their relationship can evolve into one of employment if the parties do not both conduct themselves in keeping with their original intended status.

Genuinely self-employed locums should be able to refuse shifts offered to them, for example if they have work commitments elsewhere or they have simply chosen not to work on any given day. When managed correctly, a locum arrangement affords the pharmacy flexibility as the business is not obliged to offer the locum regular shifts – the intention is that they are engaged on an “as required basis”.

It is quite possible that locums who have fixed and regular hours of work have slipped into a part-time employee relationship over time.

A helpful indicator of self-employed status is the ability of a locum to provide a suitably qualified substitute to work in their place if they are unable to work a previously agreed shift; this substitute could be another locum engaged by the pharmacy or someone they recommend to the pharmacy for approval, for example.

On the other hand, employees are expected to perform their duties themselves, rather than send someone else in their place. This is linked to the higher level of control that is often exercised over employees in the workplace.

Individuals who are self-employed are generally expected to be able to profit from their work, are not paid via a pharmacy’s PAYE system and account for their own tax liability. In the context of a locum, they could profit from their own work by appointing a substitute who they then pay at a lower hourly rate than that paid to them by the pharmacy.

Self-employed individuals also assume an element of financial risk because if they do not work (for example, if they are unwell or on holiday) they do not get paid. This is reflected in the more beneficial tax treatment self-employed individuals enjoy. However, employees and workers receive statutory sick pay (if certain criteria are met) and paid annual leave.

Locums are expected to self-insure against any personal liability for any loss, liability or cost incurred by the pharmacy which arises in connection with their provision of the services under their locum agreement. Employees will be covered by the pharmacy’s employee liability insurance policy and would not be expected to fund such cover.

In determining employment status, tribunals will consider the full working arrangement and locums who are not determined to be an employee with unfair dismissal protection could ultimately be deemed to be a worker with the right to paid annual leave and the National Minimum Wage, for example.

The recent gig economy cases have resulted in some working arrangements being determined to be worker relationships, despite the parties originally agreeing that the individuals were self-employed.

The Review seeks to tackle exploitation (inadvertent or otherwise) to ensure that individuals are appropriately protected for the work they carry out but the gig economy cases highlight the difficulty of getting employment status right in practice. Whether any changes that stem from the Review provide helpful clarification to the current position remains to be seen.