False self-employment

The rise of what is commonly called the 'gig economy' has brought with it an increase in false self-employment.

The rise of what is commonly called the 'gig economy' has brought with it an increase in false self-employment. Anyone falsely classed as self-employed is denied rights entitling them to holiday pay or the National Minimum Wage, for example, which they would receive if they were regarded as workers or employees. This saves the employer money, but the TUC regards the practice as exploitation:

"The TUC is worried that the growth in self-employment is also driven in part by sham forms of self-employment, which are used by some employers to reduce their tax liability, avoid the minimum wage and deny workers their rights. Sham self-employment includes some gig economy workers, and people who are contracted to a single employer through a personal service company, rather than being contracted as an employee. Self-employment should be a choice made by the worker, not the employer."

Workers engaged through false self-employment miss out on:

  • Income security.
  • Health and safety protection.
  • Paid sick leave.
  • Limits on working hours and holiday pay.
  • Overtime rates.
  • Redundancy pay.
  • Travel allowances.
  • Pension auto-enrolment.
  • Accessing statutory union recognition.
  • Protection from unfair dismissal and discrimination at work.

If you suspect you are classed as falsely self-employed, or are being pressured to accept this status, contact an NUJ rep or official. Your case may need a legal determination. False self-employment can best be resisted in workplaces where the NUJ is recognised and able to negotiate terms and conditions with an employer through collective bargaining.

Unions have succeeded in claims brought against employers using false self-employment as a tool to save money. Tribunals have been asked to take a 'realistic and worldly wise' approach to these cases, on account of the unequal bargaining power involved and the 'take-it-or-leave it' nature of any paperwork (Law at Work 2020, p39).

Tribunals also analyse marketing material to see if it implies that a workforce is directly employed, and able to provide services on demand. This is because an organisation might create contract documents which deem its workforce to be self-employed, while at the same time telling customers and the public it has a workforce of employees under its control, able to respond to customers' needs at any time during business hours.

A key issue in cases of false self-employment is whether you have the right to send a substitute to do your work. If you do have a genuine, unrestricted right to send someone in your place, you are unlikely to succeed in a claim for worker status.

However, employment tribunals have broadly resisted attempts by employers to avoid worker rights by introducing substitution clauses. In one important case, the Supreme Court ruled that swapping shifts internally did not amount to a contractual right to send someone else to work that shift.