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Wednesday, 01 February 2017 10:24

Employees – they aren’t really are they?

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Recently two cases occurred where “employees” have sought clarification from employment tribunals of their actual status. In both cases, based on the facts not the paperwork, the tribunals have found the claimants were workers not subcontractors.

The law recognises 3 types of people who work with organisations:

  1. Employees who have a contract of employment
  2. Subcontractors  who have no association with the company but merely provide services on an as and when basis
  3. Workers who are an intermediate stage which although is recognised in the employment rights act is not clearly defined.
    • Individuals are likely to be workers if:-
    • they have a contract or other arrangement to do work or services personally for a reward (your contract doesn’t have to be written)
    • their reward is for money or a benefit in kind, for example the promise of a contract or future work
    • they only have a limited right to send someone else to do the work (subcontract)
    • they have to turn up for work even if they don’t want to
    • their employer has to have work for them to do as long as the contract or arrangement lasts
    • they aren’t doing the work as part of their own limited company in an arrangement where the ‘employer’ is actually a customer or client
    • their contract with the business uses terms like ‘casual’, ‘freelance’, ‘zero hours’, ‘as required’ or something similar
    • they had to agree with the business’s terms and conditions to get work - either verbally or in writing
    • they are under the supervision or control of a manager or director
    • they can’t send someone else to do their work
    • the business deducts tax and National Insurance contributions from their wages
    • the business provides materials, tools or equipment they need to do the work

why is it important? well workers have the following rights which a self-employed subcontractor does not:-

  • 5.6 weeks' paid annual leave each year
  • a maximum 48 hour average working week, and rest breaks
  • the national minimum wage (and the national living wage)
  • protection of the whistleblowing legislation

Tribunals do not just look at the documentation which may say X is a subcontractor but dig deep into the facts of the relationship, as both Uber and Citysprint have found out. If both company’s appeals fail then both of them will be faced with substantial claims for unpaid holiday and unpaid wages and possibly other claims as well.

Review documentation now remove any ambiguities look at the facts on the ground and if necessary be prepared to admit that an individual is a worker its cheaper and less stressful in the long run.

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