Co-op drivers case raises questions about bogus self employment

An employment agency that provides drivers for the Co-op is facing legal action over the alleged use of bogus self employment practices. Philip Sayers, Employment lawyer at Coodes Solicitors comments.

Britain’s largest union, Unite, is commencing legal proceedings against Agency Drivers Network (ADR) – an employment agency that provides drivers to the Co-op. Unite claims that ADR demands its drivers set up their own limited company so they can work on a self-employed basis. As with other high profile cases, such as Uber, this means the company does not have to pay its staff holiday pay, sick pay or pension payments.

It is becoming more common for employers to classify its workers self-employed. What often comes to light when things go wrong is that they should in fact be legally classed as employees or in the intermediate category of workers.

Employers have a number of reasons why they would wish people to be deemed self-employed. Firstly it gives an employer more flexibility: they do not need to provide guaranteed hours and can dispense with someone immediately. Secondly and related to this, is that the people in question would not be able to claim unfair dismissal, would not be due redundancy payments and would not be due either holiday pay or sick pay. Thirdly, the employer would not have to make National Insurance Contributions for a self-employed person.

Some people may prefer to be deemed to be self-employed for their own flexibility or tax breaks. However, these arrangements are generally instigated by the ‘employer’ and the ‘employee’ is given no choice about being deemed self-employed. Most legal challenges to workers being termed self-employed either originate from the workers themselves or from HMRC, looking for unpaid tax. If a ‘self-employed’ person is held to be an employee by a Tribunal the Tribunal has the right to refer the file to HMRC who could then go after both the employer and employee for tax breaks they have had from deeming the latter to be self-employed.

This latest case is yet another reminder that businesses need to be extremely careful about labelling anyone as being self-employed.

For more information on this or any Employment enquiries contact Philip Sayers, Employment team, Coodes Solicitors on 01872 246200 or philip.sayers@coodes.co.uk