WIREDGOV

Clearer rules are needed to determine whether someone is an employee, a worker or self-employed, says Citizens Advice.

Responding to the verdict of an employment tribunal case brought against Uber by a group of its drivers- which has ruled that the Uber drivers who made a tribunal claim are "workers" under employment law,meaning they are entitled to rights including the National Minimum or Living Wage and paid holiday- the national charity reiterated its call for changes to employment status rules which balance the needs of individuals and employers.

Last week Jane Ellison, the financial secretary to the Treasury, said HMRC is setting up an “employment status and intermediaries” team which would look to tackle issues including false self-employment, and earlier this week the Business, Energy and Industrial Strategy committee announced it will investigate the rights and treatment of non-permanent staff.

But without clearer rules around employment status and a legal definition of self-employment Citizens Advice says many could still find it challenging to get the rights at work they should be entitled to.

Citizens Advice research has previously shown up to 460,000 people could be falsely self-employed, where bosses tell staff that they are self-employed when, in law, their true status would be that of an employee or worker.

The research also found false self-employment costs the government as much as £314m a year in lost tax and employer national insurance contributions. And each false self-employed person also loses an average of over £1,200 per year.

In the last year local Citizens Advice have helped people with 4,500 employment status issues.

Chief executive of Citizens Advice Gillian Guy said:

“This case highlights the urgent need for clearer rules around employment status.

“The fact it takes an employment tribunal to decide whether these drivers are self-employed shows that proving employment status is an extremely complicated and costly process. For many people struggling at the sharp end of insecure work, such as in false self-employment, taking such a case is simply not an option - not least because of employment tribunal fees of up to £1,200. To address this Citizens Advice is keen the government considers introducing an effective online test people could use which would determine their employment status.

“It is encouraging to see the government is keen to tackle the challenges brought by insecure work. It’s very positive that the Prime Minister has announced an independent review of modern employment and that the Business, Energy and Industrial Strategy (BEIS) committee is to investigate the rights and treatment of non-permanent staff.

“We are keen to share our evidence and expertise with Matthew Taylor’s review and the BEIS inquiry to find simple, enforceable solutions which balance the needs of workers, employers and consumers.”

Citizens Advice wants to a see an employment status system which is:

• Simpler than the current system

• Enforceable

• A fair balance of rights and responsibilities between the individuals and their employer

To deliver on this we are encouraging government to consider:

• Introducing a statutory test of self-employment, which could also take the shape of a effective but user-friendly online test.

• This would be supported by the presumption that people have worker rights unless the statutory test says they are self-employed, this will mean it is then for the employer to prove (at a tribunal, at their cost) that it is genuine self-employment.

Questions which could help determine if you’re falsely self-employed

• Do you have to do the work yourself, or can you get someone else to do it for you?

• In reality (rather than what the contract says), are you allowed to work for more than one customer?

• Are you able to negotiate the terms and conditions of your contract?  For example do you have control over your hours / pay / equipment?

• Are you running the relationship with your employer as a business that can make money?

Citizens Advice false self-employment case studies

A gardener turned to Citizens Advice for help after his employer of nine years told him they wanted him to stop being an employee and instead work for them on the same basis but as  as self-employed. He feared if he refused he would lose his job.

A labourer sought help as he was concerned he was false self employed: he worked regular hours, took instruction from employer on what to do and drove a van provided by the company. But his boss told him he was self-employed: so he got no sick or holiday pay, paid his own National Insurance Contributions and had to complete a tax return each year.

A call handler for a taxi company came to Citizens Advice as she couldn’t afford time off work to go on holiday as her employer told her she was self-employed. It turned out she could demonstrate worker status, and as such was entitled to paid holidays and was also being paid below the minimum wage.

What is employment status?

There are three types of employment status for employment rights purposes:

• Employee: An employee has a contract of employment with their employer where the worker agrees to perform the work personally under the control of the employer and, most importantly, there is a guarantee from the employer that a certain level of work will be provided and from the worker that they will do it. A contract exists when terms such as pay, holiday and working hours are agreed. It’s important to note that the contract doesn’t have to be written down and terms and conditions can be agreed verbally. Employees are entitled to a range of rights including the right to claim unfair dismissal, the right to notice and redundancy pay and maternity leave.

• Worker: A worker is anyone who agrees to perform work personally for another person, but is not defined as self-employed. There's no requirement for an employer to guarantee to provide, or the worker to do, a certain level of work. Worker status therefore includes many casual workers, agency workers, freelancers and seasonal workers. While they do not have full employee rights workers are entitled to some employment rights including the National Minimum Wage and holiday pay as well as protection against discrimination.

• Self-employed: A genuinely self-employed person is in business on their own account. They may contract with a client or customer to perform work personally or to get someone else to do it. The contract is for delivery of an outcome, rather than how the self-employed person must achieve that outcome. The customer is buying a service, rather than the labour of a particular worker or employee. Self-employed people don't have the same employment rights and responsibilities as employees or workers, for instance they have to arrange paying their own tax and are not entitled to the National Minimum Wage

Notes to editors

1. The Citizens Advice service comprises a network of local Citizens Advice, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
2. The advice provided by the Citizens Advice service is free, independent, confidential and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
3. To get advice online or find your local Citizens Advice in England and Wales, visit citizensadvice.org.uk
4. You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers.
5. Local Citizens Advice in England and Wales advised 2.5 million clients on 6.2 million problems in 2014/15. For full service statistics see our publication Advice trends.
6. Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 2,500 service outlets across England and Wales.