When a 29-year old courier from South London took on her bosses in a bid to redefine her official working relationship, she knew it could change the way millions of people are paid and treated across the UK.
Last week, Maggie Dewhurst won her case against City Sprint, in which, crucially, she was recognised as an employee rather than a self-employed partner - largely because she wasn't able to pick and choose the jobs she was given. It should mean she is awarded lasting rights and benefits that had previously been refused because of employment law loopholes relying on the perceived nature of her relationship with the business.
While City Sprint considers its response to the case, the circumstances will strike a chord with millions of UK workers operating in an employment no-man's land with few clues as to whether they are one of the ever growing ranks of self-employed or are in reality a member of staff.
But this battle, the latest in a long line of legal disputes over staff status has been hailed by campaigners for workers' rights who believe it could force more employers to step out from the employment status fog to accurately acknowledge, reward and support their staff.
What's in a name
Being sure of that relationship isn't simply about whether you get a branded business card or not. It can have fundamental implications for your current pay and benefits as well as your future financial security.
With 5 million people across the country now defined (or defining themselves) as self-employed, the TUC's latest report shows that sick and holiday pay, redundancy rights, the right to request flexible working, maternity, paternity, adoption and emergency leave as well as protection from unfair dismissal and a range of valuable benefits could all hang in the balance in case of employment status uncertainty.
Speaking in response to the ruling, TUC General Secretary Frances O’Grady, said: “The current rules on whether someone is self-employed or on employee are allowing unscrupulous bosses to cut corners and get away with not paying the minimum wage. Or providing basic rights.
“Employment law needs to be dragged into the 21st century so that the onus is on bosses to prove that someone is genuinely self-employed, rather than workers having to challenge employers on a case-by-case basis. All workers deserve respect, fair pay and decent protections at work."
Not only that, but as the gig economy flourishes and the number of those in uncertain or ill-defined professional relationships with clients or employers doubles in just a decade, their pay rates are plummeting compared with permanent staff.
The TUC calculates that self-employed workers now have earnings 40 per cent lower than those of employees, compared with 28 per cent lower a decade ago. One in three self-employed households earn less than £200 a week – equating to more 1.2 million families.
Zero-hours workers now earn £3.80 less an hour than the average employee – a third less compared to around a quarter less in 2006. Hourly pay for zero-hours workers has increased by just 67p in the last decade.
Nor is the effect on the individual a short-term one.
“Being self-employed has many benefits, including flexible working, improved work-life balance and more time with family," added Jackie Leiper, retirement planning specialist at Scottish Widows.
"However, being classed as self-employed excludes workers from certain employee benefits, such as a workplace pension, which is a significant barrier to saving for the longer-term and a concern, as research from our latest Retirement Report shows that almost one quarter of self-employed people are not saving at all for retirement.
“Without targeted support, the lack of pension provision in this sector of the labour market threatens to become a significant problem. We believe that pension contributions made by the self-employed should be exempt from National Insurance, in the same way that employer pension contributions are.”
Add to this the restrictions and limits on borrowing and credit faced by many self-employed workers as a result of the credit crunch and the difference between being an employee or a sole trader becomes critical.
But it's not just the way employers consider their contractors, consultants, partners or staff and with concerns that the official numbers of self-employed workers is woefully short of the true mark, the Work and Pensions Committee has announced the launch of a new inquiry into whether the UK welfare system adequately supports the self-employed in terms of benefits such as Universal Credit.
"The welfare state was created in an era when relatively secure long-term full-time employment and traditional families dominated," said Frank Field MP, Chair of the Work and Pensions Committee. "Even Universal Credit will be at least 12 years old when it finally finishes rolling out. The labour market is changing very quickly: self-employment, uncertain hours, insecure short-term contracts and gig work are becoming ever more prevalent. We will be investigating the extent to which the welfare system can adapt to these challenges and what may need to change."
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