Bolt, the app-based taxi business, is the latest company to come unstuck by the uncertainty surrounding employment status, joining the likes of Pimlico Plumbers and Uber. It may face backdated costs due to miscategorising individuals. Around 15,000 Bolt drivers won a tribunal to be classified as workers rather than self-employed.
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In the UK, being a worker is one of three statuses – the other two being employed and self-employed. Workers have legal rights such as statutory paid holiday, minimum wage and rest breaks entitlement, but they do not get all the benefits that employees are entitled to, for example redundancy, maternity pay and unfair dismissal protection.
Understanding this status is crucial for employers to ensure that individuals working for them receive what they are entitled to. Getting someone’s status wrong can lead to tribunal claims and backdated awards.
A worker is someone who operates in a similar way to employees in that they have agreed to work for a company or person but are not fully independent like a self-employed contractor. They are usually expected to do the work themselves, but they do not run their own business, and often have limited control over how the work is done.
In determining how a ‘worker’ is different from a self-employed contractor, a court or tribunal will look at these key points:
● Control: Workers are often told how and when to do their job, while self-employed contractors decide for themselves how to deliver the service.
● Personal service: Workers usually have to do the work themselves. Contractors should be given the option of sending someone else in their place.
● Flexibility: Workers might have to accept work when it is offered, while contractors can pick and choose jobs.
● Business risk: Contractors run their own business and take on risks, by for example not being paid for a job or losing money. They can also work freely for other companies whereas workers are paid regularly from the same company and do not face the same risks.
● Integration Workers often feel part of the company, following its rules and using its tools. Contractors operate independently.
A court or tribunal will consider these points carefully, and try to understand the day-to-day reality of the relationship between parties, looking beyond what is simply contained in a written contract. In Bolt’s case, the tribunal found that ultimately the power lay with the company.
Bolt’s argument that the contractual relationship for jobs was between the customers and drivers was rejected.
Cases like this have shown how the lines between the statuses can blur. It is a problem that is becoming more and more common, especially within the gig economy. It is not enough to simply rely on a written contract or a title; companies need to consider what status the working arrangement actually represents.
Companies should therefore regularly review how people work for them, making sure that contracts match the reality of what happens on a day-to-day basis. If someone is treated like part of the team, expected to always follow company rules, and has no freedom to work elsewhere, they are probably a worker – even if their contract says otherwise.
Pam Loch is managing partner of Loch Law
This article was published in the November/December 2024 edition of HR magazine.
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