Need for clarity in employment law has never been greater

Gig economy battles of Pimlico Plumber and Deliveroo

There was no shortage of media debate last week on the subject of the gig economy and the correct employment status that certain self-employed workers should fall under.

Last Wednesday, a plumber won his Supreme Court case against Pimlico Plumbers after it was decided the worker should be entitled to employment rights despite being registered as self-employed.

Just a day or two later and it was Deliveroo in the spotlight once again, as a union representing the food delivery firm’s riders was given the go-ahead to challenge the company in the High-Court over the rights handed to its self-employed workers.

It has been argued by experts that both cases could have massive implications on the UK’s growing gig economy, with increasing numbers of self-employed workers predicted to put forward their case for employment rights.

Certainly, the Pimlico Plumber result and the Deliveroo saga both signal the need for clarity in employment law. It’s vital that each party in the supply chain can recognise a self-employed individual, a gig economy worker and an employee. With 4.8 million self-employed people in the UK, the need for transparency across the board has never been so important.

The lines between the three sets of workers are currently blurry at best, which has been highlighted repeatedly over the years, through Uber rulings, Deliveroo controversies and now this high-profile Pimlico Plumber confusion. The recent Taylor Review did allude to this, and suggested the creation of a ‘dependent contractor’ status, which would protect vulnerable gig economy workers.

Currently, employment law does offer something similar - a ‘worker’ status - which entitles individuals to certain rights, but the ‘dependent contractor’ status would (in theory) help make the difference between a gig economy worker, a self-employed individual and employee clearer for everyone.

The gig economy hitting the headlines yet again raises a very important point, and one which we mustn't overlook; there is a significant difference between gig economy workers such as Uber drivers and Deliveroo riders, and independent contractors, many of whom command day-rates of £700 and over.

With this in mind, any potential evolution of employment law should not assume both are one, simply because both are recognised as self-employed. In many cases, these two sets of workers’ needs, earnings and wants are quite different.

Gig economy workers might well need greater protection in the form of employment rights. Independent contractors however, would often tell you they are happy working without such benefits. For these individuals, it is IR35 that is their main focus.

And you might well be wondering where IR35 falls into this equation. As far as the tax system is concerned, you’re either self-employed or employed. There is no between, as there is in employment law. So theoretically, these gig economy rulings should not impact IR35.

That said, in reality, ongoing confusion over employment status could have implications on the setting of tax and IR35 status going forward.

Following IR35 reform last year, public sector organisations and recruitment agencies are now tasked with setting the status of the contractors they engage and place. For these largely inexperienced parties to be sure they are making well-informed IR35 determinations, it’s vital the Government makes it easier to accurately spot the difference between an employee, a gig economy worker, and a self-employed individual.

Ultimately, should the Government decide to extend last year’s changes - and hand private sector engagers the responsibility for setting IR35 status - the need for this would become all the more important.