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By Sarah Gadd and Katie Campbell

Companies operating in the “gig economy”, using a largely self-employed workforce, have enjoyed enormous growth in recent years and have made popular M&A targets. In the UK, these companies have come into conflict with long-established employment law. In our view, current laws are not fully equipped to deal with staffing models in which staff and companies alike seek more flexibility than the traditional “masterservant” employment relationship affords. For M&A deals in which business models operate on the basis that a significant proportion of the workforce is selfemployed, acquirers should consider the real nature of the working relationship to assess the risk of staff being reclassified as workers or employees. Reclassification is not only an issue in the newer gig economy sector but also in industries operating a self-employed model, particularly if small, independent businesses become part of larger corporate entities.

By Catherine Drinnan

Paying employees for their annual leave in the UK used to be viewed as a straightforward process, with many companies calculating holiday pay at the employee’s basic pay rate.

However, in 2014, several employment law cases raised the issue of whether, during annual leave, employees should also receive an amount in respect of overtime and commission. One case indicated that even non-guaranteed overtime needed to be included in holiday pay if the overtime and commission were part of “normal remuneration”. In essence, if an employee regularly undertook overtime work, then they should expect to receive the same level of remuneration while away on holiday.