The leader of the organisation proposing a class action against Purplebricks says there’s been a “phenomenal” response to his request for potential claimants.
Contractors For Justice, known as C4J, represents workers that claim to have been disadvantaged by companies that changed the status under which they engage workers.
C4J says that in other sectors such as food delivery and taxis, this approach has been proven to fall foul of HMRC IR.35 regulations. It wants to set up Group Litigation Orders - popularly known as ‘class actions’ - against Purplebricks, which recently changed the status of its Local Property Experts and Territory Owners from self-employed to employed.
At the time that C4J made its announcement about the class action proposal, it had 100 former Purplebricks workers on board - now there appears to be many times that number.
Peter Fletcher, spokesperson for Contractors for Justice, has told Estate Agent Today: “Despite only being a matter of days from our initial announcement that we intend to pursue litigation against Purplebricks, the response from former and current Local Property Experts and Territory Owners has been nothing short of phenomenal and to the extent that we have had to recruit more staff to deal with the inbound enquiries.
“The number of Purplebricks agents that have signed up with us now is well into the hundreds and we will be providing a more detailed update in the coming weeks at which point it will be clearer as to when the action itself will formally commence”.
C4J - which has a website recruiting former Purplebricks workers here - says the initial basis of the action centres upon the non-payment of holiday pay which it states previous and current workers may be due if it is proven that they were in fact employed.
The claim will also seek to recover the workplace pension contributions that potentially should have been made by the ‘employer’.
C4J says these two elements alone add up to 12.07 per cent of each year’s earnings for holiday pay and up to 8.0 per cent for pension contributions, plus interest.
This development in potential legal action comes following a torrid day for Purplebricks yesterday.
At 7am it issued a profits warning, which triggered a one-third collapse in its share price before 8.30am.
Analysts at Peel Hunt, the agency's broker, had thought that it would turn a pre-tax profit of £1.2m this year but they have now predicted a loss of £12.4m. For next year, they forecast a £7.1m loss, having previously estimated a profit of £7.9m.
The beleaguered agency is warning its investors that instructions are anticipated to be plummeting from 35,387 to 22,000 during the second half of this year, while cash in the bank has already dropped from £75m last year to £58m now.
Meanwhile in addition there is a new pricing structure involving a form of no-sale no-fee, and the controversial move to bring many of its formerly self-employed contractors into full-time employment.
Throughout yesterday the agency’s share price hovered around the 34p mark - some 10 per cent of its share value in the distant past.