"How do I differentiate between an employee and a self- employed person and what are the implications for the employer. How do I handle it?"

As reported in the Guardian on 19th July last, in a tribunal hearing described as “the case of the year in UK employment law”, lawyers working for a group of Uber drivers will argue that the terms and conditions of their work with the company mean that they are not technically self-employed and should be entitled to a range of benefits that they currently do not receive.  Annie Powell, a solicitor at law firm Leigh Day who will represent the drivers, was quoted in the Guardian as saying that the case hinged on two things: the nature of Uber’s business and the control it had over drivers. The San Francisco-based Uber is defending itself as a tech company that acts as a middleman between rider and driver, and that it should not be deemed a transportation company, a solicitor representing the drivers told The Guardian.

Powell said the hearing would seek to prove that this was not the case, and that because drivers were subject to ratings and were not told where customers needed to be dropped off, they were not operating as self-employed businesses. “We are arguing that they are workers ... Workers have fewer rights than employees, but are entitled to the national minimum wage, holiday pay, the right not to be discriminated against and the right not to have deductions made from their salary,” she said.

In Ireland, the thorny question of whether an individual is an employee, working under a contract of service, or an independent contractor, working under a contract for service, is often raised.  Most recently, in a case involving Ulster Bank, reported in IRN on 30th June last, the Employment Appeals Tribunal (“EAT”)  concluded that the working relationship between the Claimant and Ulster Bank had drifted into a contract of service.  In the case, the EAT helpfully listed the tests most commonly relied upon for determining whether an individual is an employee or an independent contractor.

1. The Enterprise Test which examines whether persons are in business on their own account.
2. The intention of the parties – which should be made evident in the contractual documentation between the parties.
3. How taxes are levied – although this will not be determinative.
4. The handling of sick pay and holidays.

However, the EAT stressed that whether a worker is an employee or self-employed depends on a large number of factors and not all details are of equal weight or importance in any given situation.  The EAT was of the view that the right approach is to stand back and look at the picture as a whole.

Employers should look to the Code of Practice for Determining Employment or Self-Employment Status of Individuals and should ensure that clear, contractual documentation is in place, accurately reflecting the intention of the parties.