When an employee is not an employee

The recent Uber tribunal decision, which gave drivers the right to be classed as workers, serves as a reminder to employers that the tribunal will have little difficulty in dismissing employment status labels where they believe they do not reflect the true contractual relationship.

IMPACT ON YOUR BUSINESS

Whether an individual engaged with your business is an employee, worker or self-employed can have significant impact in terms of your level of responsibility for the individual, the statutory rights they will be covered by, and HMRC obligations.

Importantly, certain legal rights only apply to employees. However, as the Uber case has highlighted, although workers may be afforded less rights they are entitled to paid annual leave, right to a pension scheme, rest breaks and a maximum 48 hour working week, protection afforded by whistleblowing legislation and entitlement to the national minimum wage.

The line between employee/worker and self-employed is becoming increasingly blurred. Understandably there is much confusion and issues often arise where there is ambiguity, or where practice does not reflect the type of contract originally agreed, for example, where it is agreed that an individual will be self-employed but the nature of the relationship is that of employer-employee.

BE CLEAR FROM THE OUTSET

So, how do you get it right as an employer and protect your business? It is important not only to understand the status of each individual engaged with your business, but to ensure everyone has appropriate contractual documentation reflecting this. Drafted well, your contractual paperwork should provide clarity and reduce the risk of an individual’s status being challenged either legally or by HMRC.

We at Willis Employment Services can provide guidance on determining employment status and will work in partnership with you to help you review your contracts of employment, policies and procedures.