Employment status for employers

Employment status is not always straightforward. There are many overlapping elements to be considered and it should always be determined on a individual basis, rather than applying a blanket approach.

Employers should be aware that the tribunal will always look beyond any contract in place to the actual working relationship between the employer and the individual. You can find out more about how we can assist you with employment contracts here.

Currently, there are three categories of worker defined by employment law. The distinctions between each are important, as different rights are afforded to each category:

  1. Employee

An employee is defined as “an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment.”

Typical characteristics of employee status are:

Employees are entitled to a wide range of rights such as Statutory Sick Pay, statutory leave, minimum notice periods and the right to request flexible working, alongside having protection from unfair dismissal and rights for continuing employment where business is transferred.

  1. Worker

A worker is defined as: “an individual who has entered into or works under (or, where the employment has ceased, worked under): a contract of employment, or any other contract… whereby the individual undertakes to do or perform personally…”

Typical characteristics of worker status are:

Workers are entitled to some employment rights including National Minimum Wage, paid holidays, and protection against discrimination.

  1. Self-employed

Typical characteristics of a self-employed person are:

Be aware that a contractor may be classed as a worker or employee if they are employed by an agency.

A self-employed individual will not have a wide range of employment rights. However, they will still have protection for health and safety and may be afforded protection against discrimination in certain circumstances.

The “gig economy”

Taking on staff on a “gig” basis is attractive to many companies as it allows them flexibility of staff without the significant financial implications, however they must ensure that the status of the working relationship is clear.

There have been a number of recent high-profile employment cases dealing with employment status of gig workers. The landmark case of Uber v Aslam highlights that the courts and tribunals will always examine the reality of the working practices to assess what arrangements apply, not just the written terms of the contract and is a reminder, where it is necessary, for businesses that worker’s rights cannot be ignored.

What are the consequences of failing to acknowledge an individual’s correct status?

Employers could be liable to paying extra tax, National Insurance contributions, interest and fact other penalties for failing to get employment status right.

The consequences can be costly, so it is important to seek legal advice from an employment law expert. You can contact our employment law specialists below for more details.

Our Employment status for employers Team

Unsure who to contact? Make a general enquiry:

Newbury Thatcham Maidenhead London Windsor Swindon
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