Post Office could face multimillion-pound bill over employment status case

Post Office could face multimillion-pound bill over employment status case

Postmasters take the Post Office to an employment tribunal, claiming they are workers and not self-employed

120 sub-postmasters have launched legal proceedings against the Post Office, arguing they are not self-employed, but workers and therefore entitled to holiday pay, sick pay and a pension.

This high-profile case is due to be heard at the London Central Employment Tribunal later this month and will consider the employment status of the individuals, who run Post Office franchises. The claimants, backed by the Communication Workers Union, have said that the Post Office has a degree of control over the work they carry out.

If successful, experts have said this case could have implications not just for the claimants but for the 8,500 sub-postmasters around the UK along with millions of other gig economy workers.

Some postmasters ‘earn below minimum wage’

It may also see the Post Office handed a multimillion-pound bill at a time when it’s still dealing with the recent fallout in which dozens of sub-postmasters were wrongly prosecuted for fraud and false accounting.

Lead claimant in the case, Mark Baker, who runs a Post Office in Wiltshire, told the Financial Times, that some postmasters “earn well below the minimum wage”.

For example, the 63-year-old said that when dealing with a parcel, which is “not a quick transaction”, he would only earn 38p as a postmaster.

The Post Office flagged the tribunal as a potential risk in its annual report, published in March 2021.

Post Office says it has ‘increased remuneration’ by £27m

A spokesperson for the Post Office said: “We 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.

“[…] Post Office’s new management is focused on resetting our relationship with postmasters and addressing the past issues relating to remuneration. 

“To date, this has included increasing annual postmaster remuneration by £27 million over the past year and average remuneration across our network of 11,500 branches is up seven per cent against last year.”

The case comes after a growing number of court rulings – including an Uber case at the Supreme Court – have found that those working in the gig economy are workers and not self-employed.

Employment status specialist Seb Maley, Qdos CEO, said: “The rapid growth of the gig economy along with complex employment status rules means there are likely to be many more on the horizon. 

‘Grey area’ in employment status law leads to ‘chaos’ 

“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.”

Andy Chamberlain, Director of Policy at self-employment trade body, IPSE, added that this case highlights the “rising tide of evidence” at the “confusion in the gig economy” and the government must step in to protect both freelancers and workers.

He said: “The crucial problem is that in the UK, while worker and employee status are defined, there is no such clarity on self-employment. 

“This grey area is leading to the chaos of the gig economy and a situation where status can only be defined by lengthy employment tribunals: this cannot continue. 

“To protect the freedom of the many legitimate freelancers – and also secure the rights of falsely self-employed people – government should define self-employed status in law.”

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