A number of recent high profile cases have highlighted the complex issues and risks concerning self-employment and worker status. Many individuals and businesses believe that as long as a contract or other document states that it is the party’s intentions that an individual contractor is self-employed, this label will be taken as gospel at a Tribunal.  This is an incorrect belief, and in fact quite the opposite is the case. When considering the issue of employment status, the Employment Tribunal will carry out a detailed assessment of what occurs in practice, rather than be influenced by the labels applied.

Over time a number of leading cases have developed a multifaceted test to identify employment status, which includes considering issues such as pay, mutuality of obligation, requirement for personal service and the ability to use a substitute.  Whether an individual is deemed to be an employee, worker or self-employed it is important as this determines the rights he or she is entitled to. It also determines whether an individual has rights such as unfair dismissal, which would restrict in what circumstances an employer could terminate their employment.

Although employees have the greatest protection from discrimination and unfair treatment, workers also have a number of rights that are not afforded to truly self-employed individuals. A number of Uber drivers and City Sprint couriers recently pursued claims for unpaid holiday pay, on the basis that they were not self-employed and instead were actually workers. These claims were successful and the Employment Tribunal ruled that they are in fact actually workers as such their respective claims for unpaid holiday pay were therefore successful. These cases were of particular interest as it was the first time that individuals on a ‘gig economy’ basis, had been afforded worker status.

Worker status gives an individual a number of enhanced employment rights, including the following:-

1. 5.6 weeks’ paid holiday per year
2. A maximum 48 hour working week
3. Rest breaks in accordance with the Working Time Regulations
4. Protection against unlawful deductions from wages
5. Entitled to be paid the National Minimum Wage
6. Right to be accompanied at a disciplinary or grievance hearing
7. Protection from whistleblowing legislation
8. In some circumstances, the right to pension contributions from their employer under the auto-enrolment scheme.

In light of the case law, individuals who are engaged in ways other than by way of the traditional employer/employee relationship should consider whether the label of self-employed or worker truly reflects the circumstances in practice.

This may include, individuals who are engaged on the following basis:-

1. Business Consultants
2. Sales Consultants
3. Executives
4. Subcontractors
5. Casual staff
6. Management Analysists
7. Labourers

Such individuals may wish to obtain legal advice as to their true employment status during their employment so that they are able to access rights such as holiday or statutory sick pay. It may also be worth obtaining advice in the event the engagement is terminated, as if the individual is actually an employee, it may be possible to successfully pursue a claim for unfair dismissal. Similarly, businesses may wish to obtain legal advice in relation to employment status in a bid to avoid the risk of claims. A business is able to take steps to increase the probability of an individual being deemed to be truly ‘self-employed’ by ensuring that engagement contracts are drafted specifically   to take into account the tests outlined in the most recent case law, which if complied with will offer additional protection for your business.