In order to establish this, an employee and self-employed person must be distinguished. “employee means an individual who has entered into or works under… a contract of employment”. Whereas, being Self Employed means that a person runs their business for themselves and takes responsibility for its success or failures, they would not have the same employment rights of employees.
The advice for Ms. Miller and Ms. Henderson, would be that if they recruit drivers as self-employed it means that you would not have to pay the Employers National Insurance, compared to hiring drivers as employees, the “NI is at a rate of 13.8%” according to HM Revenue and Customs (HMRC), therefore would be cost effective for the business. The costs of Pensions which are also contributed by an employer would be saved, a self-employed person would be able to control how much they want to put towards their pension. Finally hiring Self Employed drivers saves employers from the hassle of statutory rights, for instance “Statutory sick pay, Statutory maternity/ paternity, protection against unfair dismissal, Statutory redundancy pay”.
Although there is advantages to recruiting drivers as self-employed, it would also be difficult to accomplish, especially when at some point the HMRC may prove that a self-employed person is in fact an employee. For example, the current case with Uber, the issue shows that Uber drivers were in fact workers and not Self Employed, the company has denied workers’ rights such as paying the National Minimum wage. I would advise Ms. Miller and Ms. Henderson to be conscious of recruiting drivers as Self-employed, as it is likely to be raised by HMRC during PAYE audit, who could potentially discover that you are claiming drivers who are self-employed who should be regarded as employees, based on Payroll. Ultimately the minibus business could face a close inspection from HMRC. The minibus company would be questioned in proving a driver as self-employed, for example whether being Self-employed has the freedom to assign work to someone else? It is likely that drivers are contacted with work, directed by an employer. In addition to this if the driver is working a set amount of hours or not being able to choose the hours of work then it would suggest that they are employees. To prevent this confusion, it is advised that Ms. miller and Ms. Henderson use the Multiple Test to identify a contract of employment, demonstrating the factors of an employee in comparison to being self-employed, McKenna J identified three conditions “1) Employee agrees to provide his skill in consideration of pay 2) an element of control is exercised by the employer 3) There are no provisions in the contract inconsistent with it being a contract of service”. To conclude it would be advised that Ms. miller and Ms. Henderson hire drivers as Employees as the contract of work would fall under this category.
The responsibilities they will have towards them would ensure that they receive their basic employment rights protected under ERA 1996. As an employer Ms. miller and Ms. Henderson must provide the employee with a contract and terms of employment within “2 months in writing”. Including full names of the employers/employees, a description of the job title, the pay which employee receives, hours of work, and notice requirements. Any changes to the contract must be agreed with both parties and requires consent.
In regard to Pay rate, an employee must be paid at least the national minimum wage, stated on a pay slip, with details of wage, and deductions regarding income tax and national insurance. The tax calculates how much national insurance (NI) owe, comprising an employer’s NI contribution and each employee “earning above £157 a week”.
The Working Time Regulations 1998 state that an employee is entitled to daily and weekly rest breaks, moreover they have the right to holiday pay each year and time off for maternity/paternity/adoption leave. Under Health and Safety regulation 1996, an employer is responsible to protect the health, safety and welfare of their employees who may be affected by their business and must act reasonable to accommodate a safe environment.
If an employee has been working for at least a month it is an employer’s duty to give notice if they are to be dismissed Employees who have completed 2 years’ service would be entitled to a written notice and reasons for dismissing.
It would be illegal on the grounds of Sex Discrimination to keep the business “all female”, hiring employees based on gender and on a client’s opinion would be unfair. Having said this, it would be lawful to specify a particular protected characteristic under EA 2010, If there is a legitimate aim and requirement of a single sex service which would need to be proportionate. Challenging this requirement alone and would need several factors to support this decision. A current case with the council opposing women only service, said sex discrimination would compel drivers to pick up male customers. The woman-only cab company “Pink ladies” argued that it was a club membership which could decline male customers, their reasons behind the single sex service was for safety purposes of vulnerable women alone with an unknown male driver at night. In order to advise Ms. Miller and Ms. Henderson, the taxi service should give an option of male and female drivers to customers who would prefer a women driver over male, and drivers should provide service for both genders.
Once an ET1 service has been submitted from employee, it would be advised that Mr. Cross submit a form called an ET3. If Mr. cross does not respond, then the court will make a default judgement in favor of the claimant. It is vital for Mr. Cross to submit the ET3 document and respond to the complaint. A copy of ET3 will be shown to the tribunal. During this process Mr. Wakefield may require more clarification on the ET3 form and may write to Mr. cross or representative to give all relevant documents to the case, this is known as “Disclosure”. The employer can reject to give these documents, however it would mean that the employee would apply to the tribunal for an order and explain reasons to why these documents are important. Mr. Wakefield would only be able to ask for evidence that potentially would support his case or against Mr. cross and vice versa both parties would have the same right to request relevant documents. Mr. Wakefield may feel uncomfortable with giving personal information such as medical records, however it would be deemed relevant for Mr. Cross to identify whether or not Mr. Wakefield was in fact depressed.
Once both parties have exchanged documents, an Order/ Direction from the tribunal reviewing the documents will issue instructions that must be followed within a time limit, if you do not follow these orders with good reason to, then the party will face paying costs or even having the case withdrawn. An overview of Tribunal steps for both parties will usually consider 1) case management discussion, 2) Pre hearing review 3) Whether Mr. Wakefield is entitled to make a claim. 4) The court may order Mr. cross to pay the dismissed employee until the “full hearing”. 5) After the full hearing an indication to whether Mr. cross was fair or unfair in dismissing Mr. Wakefield will be disclosed and a conclusion to remedy the situation.
The terms Unfair dismissal and wrongful dismissal must be distinguished. The legal term, “Unfair Dismissal” is a breach of Statute, where an employer has dismissed in a manner which fails to meet the standards expected. In comparison to, “Wrongful Dismissal” where there is a breach of Contract. For example, if an employer has not given employee notice that they are entitled to, they are able to claim damages as well as any other breach within the contract that would amount to wrongful dismissal
The issue to raise in defending Mr. Wakefield’s claim, is Notice. Did Mr. Cross give sufficient notice? From the facts of the case because Mr. Wakefield has been an employee for seven years, under his contract he is entitled to at least 2 months’ notice. Mr. cross failed to follow the correct statutory dismissal procedure. This requires end of employment in writing, secondly to invite the employee to a meeting which would discuss the reasons for dismissal, finally a chance for Mr. Wakefield to respond before a conclusion is made.
The email which Mr. cross sent would not be a fair procedure to dismiss. However, the only exception which Mr. Cross would be able to rely on is “Gross Misconduct” which in circumstances an employer would not need to provide notice. Gross misconduct amounts to a relationship between the employer and employee which is destroyed, for example if the employee commits theft/fraud or breaching health and safety. In this case Mr. Cross would be able to dismiss Mr. Wakefield if he believes that his actions were dishonest or his behavior was aggressive/ intimidating. Mr. cross would have to show that he had reasonable grounds for believing that this was a gross misconduct; from the photos which Mr. Wakefield posted and the caption stating “all you need is stress” would show dishonesty for using stress as an excuse to get a holiday. Perhaps, Mr. Wakefield’s response when being questioned by Mr. Cross was being rude and aggressive. Having said this, If Mr. Wakefield was not genuine about his illness, without gross misconduct, it would be difficult for Mr. Cross to argue dishonesty as he did not follow the correct procedures and the court may be in favor of Mr. Wakefield, demonstrated in British Labour Pump Co. Ltd v Byrne Ultimately the prospects of Mr. Wakefield claims would need to rely on evidence, such as medical records to prove that he was undergoing stress and purpose for going to Australia was not merely a holiday but for stress relief, Moreover, Mr. Wakefield would need to show that his actions did not amount to gross misconduct in order for failure of Notice to be applied.
The loss of Mr. Wakefield’s job would be calculated the same way as redundancy pay for a basic award, he would receive one week’s pay per year of service based on his age, (Seven years of service multiplied by one week pay: £420). Total basic award would be £2,940. The compensatory award would involve any instant loss of earnings (for instance the earnings from 6 weeks leave multiplied by one week pay), future loss of earnings, and benefits such as 10% commission, loss of employment rights in having to build 2 years’ service in new employment, and potentially money from the way he was dismissed, if Mr. cross did not follow the correct code of practice the tribunal may increase award by 25%.
In terms of an amount to settle with Mr. Wakefield a reasonable sum to offer would be between £7,500- £11,000, using the following calculations above he would receive around £10,450 from tribunal, this would be based on basic award £2,940 + £2,520 (6 weeks leave) + up to £500 (loss of employment rights) and 10% commission for example, if he sells 3 cars per-week worth £8,000 each, would give a total of £24,000 for completed sales and receiving 10%, total: + £2,400 on top of his weekly wage. The court may also offer 25% increase which would be another + £2,090. It would be fair to negotiate on £8,500 excluding the 25% increase which may be offered in court, as Mr. cross does not believe he dismissed Mr. Wakefield unfairly but is willing to compensate his entitled employment rights.