Addison Lee verdict adds to dual-status confusion, IR35 experts say

Addison Lee has been cut off from appealing its drivers to be ‘self-employed,’ mainly because of an earlier gig-economy court verdict hailed as likely to impact inside IR35 contractors.

But the ruling against the courier firm is not just significant for being determined as a direct consequence of the prior Uber verdict, where like Addison’s, the drivers were found to be workers, deserving of worker rights.

Rather, the Addison ruling also represents another ‘dual status’ case (painfully familiar to contractors who can be deemed employees with no employee rights), because drivers for the firm will likely get basic rights as workers, despite still being taxed as self-employed.

'Another dual-status case'

“Sorting this [unalignment] out is long overdue,” says tax lawyer Rebecca Seeley Harris.

“The Court of Appeal denied [Addison Lee] permission to appeal on the basis that after the Uber judgment, there was no reasonable prospect of success.

“Yet [the bigger issue of Addison being] another dual-status case… [raises] the question of whether to get rid of worker status, or include a third status for tax.”

Boss at ReLegal Consulting and once seconded by HM Treasury to help simplify IR35, Ms Seeley Harris is not alone in believing tax and employment law to need aligning.

'Unfair'

The Loan Charge APPG said this month in their ‘How Contracting Should Work’ inquiry:

“We call on the government to accept that it is unfair for workers who are taxed as employees to be denied the rights and benefits of an employee or recognition in employment law.”

Sounding aware that the unalignment can take different shapes, the MPs pointed out they were aware of the Uber verdict, to say they condemned “bogus self-employment, devised solely for employers to…avoid conferring workers’ rights”.

'Defies logic'

But the unalignment is also just plain confusing according to status advisory Qdos, where CEO Seb Maley believes “the fact that employment status and tax status still aren’t aligned defies logic.”

Of the Addison ruling, the IR35 expert said it exposes the “confusing nature of employment law,” given the appeal court judges indicated that the courier firm’s drivers will receive employment rights, but stay self-employed for tax purposes.

“After the introduction of IR35 reform this month, it’s time employment status and tax status were aligned,” Mr Maley added.

“[Otherwise], a contractor operating inside the [new off-payroll] rules pays tax as an employee but receives no rights in return.”

'Clearly define self-employment'

Yet another supporter of aligning tax with employment law, the Association of Independent Professionals and the Self-Employed, said the fix required was more foundational.

 “Both to restore the rights of exploited workers and also to secure freedom and flexibility for legitimately self-employed people, we urge the government to write into law a clear definition of self-employment,” said the association’s chief executive Derek Cribb.

“This is the true source of the confusion in the gig economy: that while there is a definition of employee and worker status in UK law, there is still no clear definition of who exactly is self-employed. We cannot continue in a situation where the only way to define self-employment is through court case after court case.”

'Many rely on freelancing's flexibility'

IPSE agrees that the Addison ruling confuses matters, saying the government must urgently step in to resolve the “tangled mix” that is the gig economy.

That mix includes not only people who “should truly be categorised as workers, but also a very large number of legitimately self-employed people who rely on the flexibility that freelancing offers,” Mr Cribb said.

In their ruling against Addison Lee, the appeal court judges said the drivers were ‘workers’ in line with a 2017 Employment Tribunal hearing, because of both their overarching contract and that logging on to the courier firm’s app meant they were accepting jobs allocated to them which they performed personally.

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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