The wider effect of the gig economy

19 May 2017

The gig economy, a type of employment characterised by short term contracts, is a market under close scrutiny.

Whilst the media has been focused on the employment status impact on the food, courier and plumbing industries, the haulage industry is also under threat from litigation. Many lorry drivers own their vehicles and are contractually engaged to drive goods on a self-employed basis. However, the drivers often try to assert that they are employees to attract increased employment rights. 

There is also increasing pressure from the HMRC who, in the recent case of RS Dhillon and GP Dhillon Partnership v HMRC [2017] UKFTT 17 scrutinised the tax status of lorry drivers engaged to provide haulage services on a self-employed basis. The decision went to the Employment Tribunal who held that the drivers were employees. In reaching its decision, the tribunal felt that the drivers were subject to a degree of control by the customer and there was no real power for drivers to provide an alternative substitute. 

A finding of ‘employee’ or ‘worker’ employment status can have significant monetary consequences on the company as well as tax implications. Both these statuses attract holiday pay and sick pay and employees can become protected from unfair dismissal and gain redundancy rights. As a result, companies engaging the drivers as independent contractors must be careful to treat their drivers as self-employed as the courts will look at the reality of the situation (for tax and employment status purposes) when deciding if the driver is, in actual fact, an employee.

The content of this article is for general information only. For further information regarding employment status please contact Catherine Johnson in our Employment team. Law covered as at May 2017.