· 2 min read · Features

The UK needs a legal definition of self-employment

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In the UK, there is no statutory definition of self-employment set out in legislation, whereas the other two tiers of employment status, employee and worker, are defined under the Employment Rights Act 1996. 

Determination of an individual’s employment status is required due to the tax implications and to determine the extent of employment rights the individual is entitled to.

For example, workers are entitled to the National Minimum Wage, holiday pay and the right to the statutory minimum length of rest breaks whereas self-employed individuals are not. 


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The government website does provide some useful guidance in this area and suggests that individuals are probably self-employed based on a number of non-exhaustive factors, including if you run a business for yourself, can hire other people at your own expense and provide the main items of equipment to do your work. 

However, without a clear statutory definition, the courts are often relied upon to determine employment status when faced with a particular set of facts, which continues to leave uncertainty for individuals not directly impacted by those court rulings.

The Association of Independent Professionals and the Self Employed (IPSE) has previously called for a statutory definition of self-employment to end the confusion surrounding whether an individual is self-employed or a worker. 

IPSE suggested that the definition of self-employment should look at whether an individual has autonomy in their work, has control over their working arrangements, takes on business risk and has a level of independence from clients.

This is a highly discussed area of employment law at the moment, with the Supreme Court in Uber BV and others v Aslam and others concluding that the drivers are workers as opposed to self-employed. 

Factors such as the extent of Uber’s control over drivers' pay and logging drivers out of the app influenced the decision. 

However in a previous Court of Appeal decision, R (on the application of the IWGB) v CAC and Roofoods Ltd t/a Deliveroo, the Union’s appeal was dismissed and the Court of Appeal held that Deliveroo riders are independent contractors as opposed to workers. 

A significant factor in this decision was that Deliveroo riders have a right of substitution and are therefore not required to provide services personally.

Unlike Uber, the Deliveroo judgment was not deciding employment status but the ability of riders to unionise. 

It’s clear that this issue isn’t going to go away for some time. Indeed, a number of sub-postmasters at the Post Office have brought a claim asserting that they are workers as opposed to independent contractors and are therefore entitled to greater employment rights and compensation. 

A finding of worker status could have significant consequences for thousands of sub-postmasters.

It’s not guaranteed that a statutory definition of self-employment would reduce the amount of litigation in this area or completely resolve the issue of employment status

Employees and workers are defined under statute in UK law but these employment statuses have developed incrementally through the case law and require an examination into the working relationship in practice and the intricacies of particular cases. 

There would also be the challenge of creating a definition of self-employment broad enough to cover all individuals who would fall into this category.

But ultimately, having a statutory definition of self-employment would provide greater clarity for individuals currently uncertain of whether they would most likely fall into the self-employed or worker categories, which would in turn create further certainty over the employment rights they are entitled to. 

 

Stephen Moore is partner and head of employment at Ashfords