In February 2021, the Supreme Court found that drivers for Uber should be classed as workers rather than self-employed contractors, and therefore benefited from additional rights such as national minimum wage and holiday pay. Following on from this, car and courier company Addison Lee has now also lost a case in the Court of Appeal over whether its drivers should be awarded worker status.

This decision quickly follows on from the landmark Uber judgement and further reinforces the impact of it on the gig economy. Most recently, Just Eat has announced it will give its delivery drivers worker status.

However, it is not just businesses working in the gig economy which need to be aware of these issues – any employer which engages self-employed contractors must also consider whether this is a genuine classification or whether they could claim to be workers in employment law or tax terms.

The Supreme Court in the Uber case, and the Court of Appeal in Addison Lee, emphasised that any written contract in place between the parties will not necessarily reflect the reality of the situation: the Tribunals must consider the factual reality of the relationship above all. For example, factors such as whether the contractor is obliged to accept work when offered it, whether they are entitled to provide a substitute if they are unavailable for work, and whether they are under the day-to-day control of the business are all now (following Uber) more important than what is written in any contract.

The recent cases show that employers must be mindful of how they are categorising their contractors in terms of employment status. This is also important for the purposes of tax, as the recent changes to the IR35 legislation mean that all medium and large businesses must carry out an assessment of employment status in relation to each worker.

Employers should:

• Assess employment status for each contractor they engage;
• Be mindful of their duties in respect of IR35, which requires a “status determination statement” to be created in respect of each contractor;
• Ensure that contracts of employment are well-drafted, reflecting the reality of working arrangements, and are fitting to the organisation and sector; and
• Ensure that obligations towards contractors such as written particulars, minimum wage and holiday pay are complied with as appropriate if they are deemed to be workers.