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Employment status: self-employed, employee or worker?

Employment status always seems to rear its head from time to time.  The latest case to hit the headlines concerns the taxi hire firm Uber, with some of its drivers pursuing an Employment Tribunal claim stating they are workers with employment rights rather than self-employed, as Uber alleges.  Whilst we await the outcome, it serves as a prompt reminder that employment status can be somewhat confusing for both employers and employees.

A person’s employment status is not, always, determined by what any written documentation may claim.  Furthermore, an individual’s employment status in the eyes of HMRC is not necessarily replicated in employment law.  It is not a choice by the individual or the employer, it essentially comes down to the reality of the relationship on a day to day basis.  There are three main types of employment status: self-employed, employee or worker.  Each attract different legal rights so it is important employers correctly identify the position.  Here we take a look at the tests for determining status and some of the rights attached to each.

Self-employed

  • This individual has a lot of freedom.  They can choose how and when they undertake work and are not directly supervised by the employer.
  • The employer is not under an obligation to provide work and the individual can reject any work offered.
  • The individual can appoint a substitute to carry out the work on their behalf.
  • The work is usually for a specific project or for a set period.
  • The individual provides their own equipment and materials to perform the work.
  • The individual can work for any other person.
  • The individual is responsible for their own income tax and National Insurance Contributions.

Rights

  • No entitlement to the National Minimum wage – they are paid a set price agreed for the work or sometimes receive commission only.
  • No entitlement to paid holiday or sick pay.
  • No entitlement to notice (unless provided for in a written contract).
  • No protection from discrimination.

Employees

  • This is a ‘master and servant relationship’ where the employer controls what the individual does as well as how and when they do it.
  • The employer is under an obligation to provide work and the individual is under an obligation to accept the work offered.
  • The individual must carry out the work personally.
  • Save for fixed term employees, the individual is employed for an unspecified duration of time.
  • The employer provides the necessary equipment, materials and facilities to perform the work.
  • The individual cannot usually work for other employers without permission of the employer.
  • The employer is responsible for deducting the relevant income tax and National Insurance Contributions directly from wages.

Rights

  • National Minimum Wage.
  • Paid holiday.
  • Sick pay.
  • Not to be discriminated against.
  • Right to family friendly leave, such as maternity, paternity, adoption, shared parental leave (which may be subject to certain eligibility requirements).
  • Right to statutory minimum notice periods upon termination.
  • Right not to be unfairly dismissed (subject to a qualify service requirement of two years).

Workers

  • This is a ‘master and servant relationship’ where the employer controls what the individual does as well as how and when they do it.
  • There is not however an obligation for the employer to provide work or for the individual to accept the work offered.  The individual must carry out the work personally.
  • The individual is usually employed on a temporary or casual basis, with hours that are likely to fluctuate with the flow of work.
  • The employer provides the necessary equipment, materials and facilities to perform the work.
  • The individual is free to work for other employers.
  • The employer is responsible for deducting the relevant income tax and National Insurance Contributions directly from wages.

Rights

  • National Minimum Wage.
  • Paid holiday.
  • Sick pay (in some cases, depending upon the earnings and hours worked).
  • Not to be discriminated against.
  • No right to family friendly leave.
  • No statutory notice.
  • No unfair dismissal rights.

The guidance above is only a whistle-stop tour and employment status can be a complex area of law.  If you are unsure of the employment status of any individual working for you, please contact me on 0113 350 4030 or at hello@scesolicitors.co.uk.

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SCE Solicitors is a boutique employment law and dispute resolution practice based in Leeds which advises clients nationwide.  Please note that the information in this blog is to provide information of general interest in a summary manner and should not be construed as individual legal advice. Readers should consult with SCE Solicitors or other professional counsel before acting on the information contained here.

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