Self-employed or freelance staff? The Uber case and its implications for SMEs

Does your business rely upon staff who you deem to be freelance or self-employed?

If so, you would be well-advised to take a moment to review those relationships in light of the recent decision in Uber BV & othrs v Aslam & othrs. If, as in the Uber case, those relationships upon review fall into the “worker” category, this could have substantial financial implications for your business. 

This landmark case will without doubt result in many businesses re-assessing (and potentially adjusting) their current relationships with freelance / self-employed contractors, particularly within so-called “gig economy” scenarios.

If, for example, the videographer, delivery driver or consultant, who is engaged regularly on what is believed to be a self-employed contracting basis, is subject to restrictions imposed by your business, that individual may fall into the “worker” category and be entitled to additional employment rights. The accumulation of relatively minor restrictions, such as having to wear your company uniform or drive your company branded van whilst carrying out work for you to name just a couple, could potentially shift the relationship over to one of worker/employer.

The decision in the Uber case highlights that even where a contract stipulates self-employment, this is not in itself enough to ensure that the individual is in law self-employed and has only the rights attached to self-employment. The employment tribunal will look at the relationship between the company and individual to understand whether they are genuinely self-employed or whether there are elements which are more akin to worker (or even employed) status.

If the relationship is more aligned to that of a worker, those workers may be entitled to additional rights which include holiday pay, national minimum wage and statutory sick pay.  Companies can then be liable for back pay if the relationship has been incorrectly labelled.

When is a member of staff more likely to be a worker rather than self-employed / freelance?

Each scenario will need to be judged on its individual facts and determined very much case by case. However, whilst many factors are considered, a few questions you might ask yourself when considering your relationships with individual “contractors” are as follows:

• How much control do you have over them (the more control you have, the more the balance shifts towards worker status)?
• Can they sub-contract the work or provide a substitute to do the work in their place? (if not, this may be an indicator that they are a worker)?
• Do they work for anyone else or do they solely rely upon your company for work? (if your company is their only “contract”, this again can be a strong indicator of worker status)?

Ultimately, distinguishing between worker and self-employed status can be a minefield, something which has been echoed by recent case law. We strongly suggest reviewing any aspect of your business utilising self-employed / freelance staff to address irregularities sooner rather than later.

Please contact our Employment team if you have any queries about employment status or employment law in general.