More than 100 property sales workers are set to take legal action against online estate agents Purplebricks and Yopa because they believe they are entitled to holiday pay and pension contributions.
Contractors for Justice (C4J), which is bringing the claim, believes up to 2,500 self employed property agents may qualify to join it.
Purplebricks and Yopa use self-employed “territory owners”, who manage the firms’ customers in large areas, and “local property experts” who worked under them. Many of these workers say their work should have been treated as full-time employment.
According to Peter Fletcher, a consultant for Contractors for Justice, if the online estate agency was found to have been treating self-employed agents as if they were employed then each agent could be owed thousands of pounds.
The class action centres around the non-payment of holiday pay, which self-employed workers may be owed if it is proven they were actually employed.
Fletcher said: “HMRC and the courts are clear that just designating your staff as self-employed does not mean that you may operate those workers as employees in all but name just to save the company from paying holiday pay, statutory pension contributions and so on. In recent cases involving Amazon and Uber it’s been found that self-employed contractors were in fact workers in the eyes of the law.
“Our action against online estate agencies that may have designated their workers as self-employed when in fact they may not have been, is being commenced in a similar vein to these other well-known outcomes and therefore we are very confident of our success in reclaiming in some cases many thousands of pounds for the individuals concerned’.
“I’d urge anyone that believes they may have been financially disadvantaged by their employment status, to register themselves at the C4J website as soon as possible.”
A spokesperson for Purplebricks said: “All territory operators entered into a commercial licence agreement and this was clearly set out in their contract with Purplebricks. We have always taken legal advice in regards to our licensing model – and the advice is very clear that these individuals were operating as limited companies, running their own business and with full control over their own staff.”
Lee McIntyre-Hamilton, tax partner at Keystone Law, said it was important to remember that case law largely determined employment status: “Following this and other recent high-profile cases, together with the well-publicised HMRC changes to the IR35 legislation in recent years, there is clearly a growing awareness of employment status in the workforce.
“This growing awareness should be heeded as a warning to employers who are deliberately breaching the rules. However, it will also no doubt cause concern for many employers who are genuinely trying to comply with the rules but, owing to their complexity and the fact that employment status is based largely on case law, may incorrectly assess the position.
“It is also important in these cases to recognise that there are differences in employment status for tax and employment law purposes. For example, in the Uber case, drivers were deemed to be ‘workers’ under employment law, giving them entitlement to certain employment rights. However, there is no ‘worker’ status for tax purposes and an individual is either employed or self-employed. In the Uber case, HMRC appears to be satisfied that, for tax purposes, Uber drivers are still deemed to be self-employed and do not need to be put on a payroll.”
Dave Chaplin, status expert with IR35 Shield said: “This is likely to be just the tip of the iceberg. False self-employment is nothing new and the longstanding ‘armies of lawyers’ problem still exists – where firms seek to draft contracts that deny workers the rights they should get as worker status. But, post the Supreme Court ruling with Uber this year, these firms will now be very exposed.
“Status law is complex and based on decades of case law. For years this has been kept in the ‘too-hard to tackle’ section of potential policy making, with many consultations, but no action.
“There are competing demands of needing to allow the flexible workforce to flourish, which underpins the economic growth of small businesses, whilst at the same time seeking to ensure that workers are not exploited.
“While there is no simple answer, there are some options Parliament could consider that would help reduce false self-employment.”