Employment status

There are different ways of agreeing to do work for another person, and these give rise to different types of employment status. An individuals employment status will affect the rights that they have in the workplace.

 

Status is defined by the set of factual circumstances under which work takes place.

 

There are, broadly speaking, three types of status:- 

 

These types of status also combive with other ways that an employer can engage staff:

 

Only those who are truly self-employed, in the sense that they run their own business, have no employment protection at all.

 

“Employees” have the best protection. Most dismissal-related rights (eg to redundancy pay, notice pay and to claim unfair dismissal) are only available to employees.

 

However there are a significant number of people who fall somewhere between these two groups, in the sense that they are neither employees nor running their own business. These are “workers” and entitled to some of the most important employment rights (eg to holiday and the minimum wage).

 

The definition of “worker” includes employees.

 

What factors determine employment status?

 

Over the years the courts have developed a series of tests to try to define whether someone is genuinely self-employed or an employee. None of these tests should be applied in isolation, and no single test is determinative on it’s own:-

 

  • the control test – the ability of the employer to control and direct the worker. The laying down of working hours, what work is performed and how it is performed will be important indicators.
  • mutuality of obligation – is there mutual contractual obligation for the employer to provide work and for the employee to perform it? Does the contract make provision to pay the individual even when s/he is away from work on holiday, sick leave, maternity leave, etc? An absence of mutuality of obligation is what usually prevents casual workers from being treated as employees.
  • personal service – if a worker can send someone else to work in her/his place it is unlikely that s/he has employee status because, at the most basic level, there needs to be a personal contractual relationship.

 

If an employer has a duty to provide work and a worker is obliged to do it (mutuality of obligation), the employer controls when and how the work is done, supplies tools or other equipment needed to do the work, and pays tax and national insurance contributions, it is likely that the worker is an employee. If, on the other hand, the worker can choose whether to accept work when it is offered, has discretion about how to carry it out, can make her/his own arrangement for holidays or sickness absences, pays her/his own tax and national insurance contributions and is free to work for other employers at the same time, it is likely that the worker is genuinely self-employed.

 

If a worker makes a claim to a tribunal that relies on employee status, and the employer disputes the fact that the arrangement between them amounts to a contract of employment, the matter will usually be decided as a preliminary issue, taking into account evidence of all the relevant factors.

 

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Employment Law Glossary

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Zero increases by 26%

The Office for National Statistics has released new figures that show nearly 700,000 people work on zero hours contracts - up 26% from last year.  The problems caused by these contracts will require a significant change in the law.

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