Our clients often ask us to help them determine the status of someone who works for them – for example, are they a worker, employee or self-employed/a contractor/an agent? Whilst instinctively, it seems quite a simple question, it’s actually not always that straightforward. But it matters to know the difference because the law requires businesses to treat different types of worker according to quite exacting rules and the rights of each type of worker can vary quite substantially.
It may help to look at a few illustrations.
In 2015 the government banned exclusivity clauses in zero hours contracts – which meant that employers couldn’t prevent zero hours contract workers from taking on work for someone else. The government made clear that these workers were entitled to take on other work in order to fairly manage the financial uncertainty of these less secure employment terms.
And then of course the concept of zero hours contracts itself has come under pressure. Workers increasingly seem to be challenging the businesses engaging them on whether their stated zero hours contract is genuinely of a casual nature and might instead be a more permanent (and more favourable) style contract capable of unlocking a very different set of employee rights for the individual worker.
In the latest development described in the attached article, individuals engaged on a self-employed basis are now seeking workers’ rights. Not only would a recognition of worker status have an impact on their entitlement to certain benefits, such as paid holiday, sick pay, parental rights etc; it would also impact on their tax treatment which could cost businesses more as they would have to make tax contributions and incur payroll costs for these individuals.
The starting point for determining someone’s employment status should always be the wording of the contract between the business and the individual. But if that does not genuinely reflect the relationship and/ or the business engaging the individual treats them in certain ways that imply a closer relationship than the wording of the contract suggests, then the status of the worker can easily become blurred and leave businesses exposed to challenges like the one described in the attached article.
How do you avoid this risk and ensure you have as much certainty as possible about the status of your workers? Well, in a nutshell, make sure that your contract terms with that worker are clear, that they properly reflect your intentions and that they are legally enforceable. Then make sure that you stick to them. If you’re not sure what kind of relationship you want to or should have with your workers, seek advice.
a survey by Citizens Advice last August suggested that as many as 460,000 people could be "bogusly self-employed", and therefore would be missing out on all of the rights that an employed person is entitled to.