Employment Status
Alan Kitto
There have been a number of cases reported in the press recently dealing with a grey area of employment law, that of Employment Status; these cases include Pimlico Plumbers and Charlie Mullins vs. Gary Smith and Uber vs Aslam.
The Employment Rights Act 1996 (ERA) states:
- An Employee is an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment. Contract of employment means a contract of service or apprenticeship, whether express or implied and whether oral or in writing.
- A Worker is an individual who has entered into works under (or where the employment has ceased, worked under) a contract of employment (as above), or any other contract, whether express or implied, and whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer and any profession or business undertaking carried on by the individual.
- A Consultant or someone Self-Employed is an individual working under a contract for services. A contract for services appoints a genuinely self-employed individual to carry out services for another party where the relationship between the parties is not that of employer and employee and where the individual is also not a worker.
- An Agency Worker is an individual engaged by or via an employment business and working for or in an end user.
- A Casual or Zero Hours Worker is an individual who has entered into or works under a contract of employment or other worker's contract under which the undertaking to do or perform work or services is an undertaking to do so conditionally on the employer making work or services available to the worker and there is no certainty that any such work or services will be made available to the worker.
Ensuring the correct employment status is important not just for HMRC purposes in ensuring the correct PAYE and NIC deductions are made from earnings. Workers are also entitled to be paid the National Minimum Wage (or National Living Wage), have paid annual leave and have the same protection as employees in regard to unlawful deductions from wages, discrimination and whistleblowing.
Click here to read the ACAS Employment Status guide, or here for the HMRC questionnaire to assess your Employment Status.
For more information or help on properly categorising your workforce, give us a call.