Jane fielding, Head of Employment, Labour & Equalities talks to Tessa Livock, Associate about the changing face of the workplace and takes a closer look at employment status.
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Jane Fielding: So Tess there are lots of cases in the news at the moment with people challenging their employment status. Are we seeing some new trends in that area in the law?
Tessa Livock: The cases that you are referring to I take it are the recent gig economy cases, the high profile tribunal decision in the Uber case that the Uber drivers are not self-employed contractors as Uber suggested, but in fact workers and benefit from employment rights available to workers. There has also been the decision in the CitySprint case which is another so called gig economy company. They are a same day courier service, and it was a similar decision; a courier challenged their self-employed status and succeeded in establishing that they were a worker. In terms of the overall trend I suppose this indicates growing pushback by workers, or individuals working in a gig economy, against these self-employment structures.
Jane: So what did the Uber drivers, for example, what rights have they actually shown that they now have?
Tessa: Well the tribunal decided that they were workers so they benefit from a range of valuable employment rights. They are entitled to paid annual leave and rest breaks. They are also entitled to the national minimum wage and another consequence is that they are likely to be workers for the purpose of auto enrolment, so Uber will have an obligation to enrol them in a pension scheme and make contributions for them.
Jane: So that's really going to hit some businesses' margins if they have similar claims. Is that the main risk for employers?
Tessa: Absolutely, so for Uber they have got more than 30,000 drivers in London who they had treated as self-employed, and if they implement this decision they are going to have to completely change the way that they pay these people. Another aspect of the decision actually was that the drivers were paid on a gig basis, on a journey basis, and the tribunal decided that whenever they were logged into the Uber App that that was wait time and was working time for the purpose of the working time regulations and that has an implication in terms of the calculation of their pay for national minimum wage purposes as well.
Jane: Sure, OK. So, presumably, Uber and CitySprint they have these arrangements documented quite carefully with their respective now workers. Did that not help them at all?
Tessa: In both of these cases they had contracts in place describing the individuals as self-employed and in the Uber case the contract described the drivers as customers and the passengers as service users and was really important to the way that Uber argued its defence, because it basically said we are not employing the drivers we're a software platform and these drivers are all using our software platform in order to connect with individual passengers that they are offering their services to and the contracts were drafted quite carefully in order to reflect that. But in fact the tribunal was quite scathing about the contractual arrangements and said that they bore no relation to the reality of the arrangement between the parties. I think they described them as fictional, and Uber was quite criticised for the contractual arrangements that it had in place.
Jane: So they essentially looked behind what was in the contracts at the reality of what as happening.
Tessa: That is exactly what they did, they said they did not reflect the reality and again in the CitySprint case couriers entered into self-employed contracts and they did so during a sort of on boarding recruitment process and they signed up to the contracts by clicking tick boxes on an online form next to statements such as I run my own business and I will be responsible for costs such as vehicle costs and the tribunal found that actually there was no real opportunity for them to negotiate that contract as they would if they were genuinely self-employed and it was effectively just an obstacle to recruitment and it was the inequality of bargaining power between the courier and CitySprint that meant that they had to sign up to these terms which again did not reflect the reality of the arrangements between the parties.
Jane: So I mean those cases have had a huge amount of publicity and I think there are others of a similar nature going through the tribunals at the moment. Are the Government going to take any steps to do anything about this?
Tessa: There is some Government interest in this issue. We have a number of initiatives, probably the most high profile is the independent review which BEIS has commissioned and which is being led by policy advisor Matthew Taylor. The apprenticeship levy will be coming in in April; from April 6 employers will have to pay the levy. It's going to apply to all employers, not just those who already have apprentices. The amount of the levy will be 0.5% of the employer's annual wage bill but there'll be a £15,000 allowance so that basically means that only employers with a wage bill of £3,000,000 or over will be net contributors to the levy. It will be collected via the PAYE system and made available to employers via a new online apprenticeship system and the funds will have to be used for training apprentices, they cannot be used for HR or other costs and the real aim behind this is to put employers in the driving seat in terms of getting them more involved in developing the skills that they are going to need for the future and the Government's forcing employers to do that by making them more responsible for training costs. But also, it is bringing in changes to the standards of apprenticeships and encouraging employers to get more involved in developing apprenticeships and one potential result or consequence of that is that the remit of apprenticeships is widening. It will in the future be less likely to be associated with school leavers going into manual jobs. So, for example, employers will be able to use the levy funds to upskill their existing work force provided that they meet the requirements of a valid apprenticeship.
Jane: And what happens if, as an employer, you cannot find enough training or enough people willing to take on apprenticeships in your work force or new apprentices to actually spend your share of the levy?
Tessa: That's a really good question. There is not going to be any allowance for employers who are struggling to spend it. The levy funds will be paid by the employer and then made available to the employer via the online portal but for a limited period of 24 months and if they are not used for spending on training within those 24 months then they will disappear from the employer's account and the Government will essentially be able to reuse those funds to fund apprenticeship training for other employers.
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