The gig economy might be characteristic by short-term contracts and freelance work but charities must be well versed in their legal status says Katy Wedderburn
Good charities need good people. Those people are often volunteers, trustees, employees, advisers, and everyone in between. But what rights, if any, do they have?
As far as employment rights are concerned, the answer will depend on the employment status of the individual concerned. In UK employment law there are three categories of employment status – employees, workers and the genuinely self-employed.
Recent cases coming from the gig economy have brought this issue of employment status back into the spotlight and many businesses are reviewing their operations in light of these cases, and charities and third sector organisations should be doing the same.
What do we mean by the gig economy cases?
You may have seen our recent updates following the Court of Appeal’s decision in the Pimlico Plumbers case and the Employment Tribunal’s decision in the Uber case.
There are also now reported employment tribunal decisions involving CitySprint and Excel Group cycle couriers, and we understand that Deliveroo riders are the latest to be bringing similar claims to the tribunal. These cases are now becoming known collectively as the ‘gig-economy cases’.
Generally speaking, these cases all involve businesses who engage the services of individuals (usually on an ad hoc, flexible basis) who they consider to be self-employed and not employees or workers of the business.
These individuals often provide their own tools, account for their own tax, provide their own insurance, and work under contracts that clearly describe them as self-employed. However, in each of these gig economy cases the tribunals and courts have decided that, despites the wording of the contract between the business and the operative, these individuals are workers, and not self-employed.
The tribunals and courts in these cases have looked beyond the strict terms of the contracts and considered the relationship between the parties in practice. Interestingly, reference has also been made to statements made by the companies to the public and third parties.
While each case will turn on its own facts, there is now a growing body of case law in which the tribunals and courts are finding that individuals are workers, particularly where the business retains control over the individuals.
These gig economy cases are also attracting media attention and so organisations should be prepared for questions, and potential claims, from those currently regarded as self-employed but who believe they are in fact employees or workers.
Individuals are workers, particularly where the business retains control over the individuals.
Why is this important?
Truly self-employed individuals are not entitled to employment rights, but employees and workers are. This means that workers (and employees) are entitled, for example, to pay for annual leave, the National Minimum Wage (and National Living Wage), rest breaks and may also be eligible for an employer contribution under an auto enrolment pension scheme.
Employees also have additional rights such as the right not to be unfairly dismissed and statutory redundancy payments. There is therefore a substantial financial (and administrative) risk for charities and third sector organisations who get employment status wrong.
What can charities do?
It is vitally important that charities and third sector organisations review their position in order to minimise these risks. Taking advice now could limit the financial and reputational risks later.
Charities and third sector organisations should therefore: ensure contracts are well drafted and robust; ensure that the relationship in practice is not materially different from the relationship on paper; and ensure that statements made in public do not contradict the terms of the contract.
Katy Wedderburn is Head of Employment at MacRoberts
