Postal service faces multi million pound bill if sub-postmasters win employment rights
It has emerged that 120 self-employed sub-postmasters are taking the Post Office to an employment tribunal in a bid to have their employment status changed to workers and receive employment rights from the postal service.
After a landmark Uber ruling at the Supreme Court in February, which was closely followed by news that Addison Lee had a tribunal appeal dismissed, the case serves as yet another reminder to businesses about the importance of engaging workers under the correct employment status.
The Post Office works with 8,500 sub-postmasters, at least 120 of whom claim that they work under the control of and are dependent on the postal service for their income.
If it’s decided that the Post Office has engaged sub-postmasters under the wrong employment status, the organisation could face a multi million pound bill, according to the Financial Times.
The postal service would also be required to provide at least the claimants – if not all sub-postmasters – with employment rights holiday, sick, maternity and paternity pay, along with employer pension contributions.
Victory for sub-postmasters could have wider implications
Similar to previous gig economy cases, victory could also give millions of other self-employed people who operate in this way the confidence to mount a legal challenge against their engager.
Mark Baker, who is the lead claimant in the lawsuit, told the Financial Times that “a postmaster earns nothing unless he sells something”.
He is also of the view that the recent Uber tribunal, which saw drivers become workers and receive rights, could prove important in securing the sub-postmasters a victory.
In response, a Post Office spokesperson, told Personnel Today that they “take the issues to be discussed at a forthcoming employment tribunal very seriously: “We want to resolve them and are working hard to find potential solutions that are relevant to today’s Post Office and can satisfy the interests of all our postmasters.”
Tribunal a timely reminder of tax risk
While the case, which is to be heard at the Central London Employment Tribunal this month, has no direct tax implications, it should still be taken seriously by any business that works with self-employed individuals.
If the employment tribunal was to decide that the working relationship held with the Post Office resembled employment (and not worker status) the organisation would be liable for employment tax that should have been paid to HMRC for the duration of each engagement.
In addition to the financial impact being touted, the fallout delivers another reputational blow to the Post Office, which was found to have wrongly prosecuted 39 postmasters over alleged fraud in April.
Speaking to The Freelance Informer, our CEO, Seb Maley, touched on this, offering a word of advice to businesses that engage self-employed workers.
“The implications for the Post Office could be severe, reputationally and financially – and so other companies would be wise to take note.”
“Engage self-employed workers when the relationship reflects employment and the company wouldn’t just need to cover the cost of employment rights – they would be liable for missing employment taxes too.”
For more on employment status and why it’s crucial that self-employed workers are engaged correctly, please click here.