It is so important for employers to know and understand the employment status of their staff, but why is this? It is because a person’s employment status defines the rights and responsibilities they have at work.
Recently there has been a lot of press coverage on employment status from the likes of Pimlico Plumbers, Uber, Hermes and Deliveroo, following claims bought from staff arguing that they should be classed as workers rather than self-employed. It is likely there will be more cases to follow.
There are effectively 3 main types of employment status that a person will fall into. These are:
- worker; or
An employee is a person who works under the conditions of a contract of employment. The contract will specify the salary, working hours and annual leave (naming but a few). An employee will be entitled to significantly more rights than someone who is self-employed. For example, an employee has the right to statutory sick pay, right to a statutory redundancy payment, right to maternity and paternity pay and lastly, the right not to be unfairly dismissed.
A worker is a person who undertakes work personally as part of a contract. There is a requirement for them to carry out the work themselves. This would include casual workers, zero hour contract workers and seasonal workers. Whilst they are entitled to some of the rights an employee is given i.e. holiday pay, right to receive national minimum wage and a right not to be discriminated against, they are not entitled to receive a statutory redundancy payment or protection against unfair dismissal.
For those who fall under the self-employed category, they have extremely limited rights given that they run their own business and are therefore effectively their own boss. They are not paid through PAYE and have the ability to send a substitute in their place.
Look at the real relationship and not the label
It is important to first point out that each case is considered on its own facts.
When determining the correct status of a person, the Employment Tribunal will consider the following questions:-
- is the organisation obliged to provide work and is the individual obliged to accept it?
- degree of control
- whether the individual is required to perform the work personally or send a substitute
- whether the individual uses its own equipment to carry out the duties
- whether the individual is paid via PAYE and makes National Insurance payments
In light of the above, it is important to correctly document the true relationship from the start and not leave it open to future challenge.
For advice on any of the above, please contact a member of the Langleys Employment Team.