In this 7-part series of blog posts, we explore the basics of employment law to help offer advice to managers and business owners.
Here is part 5: Employment Status
This issue is very high profile at the moment. You may have seen it mentioned on the news, in the papers (I still read them), and on-line.
Currently there are 3 statuses of employment:
Is someone who is self-employed, works for themselves as a Limited Company or Sole Trader and is not entitled to the minimum wage, employment rights, holiday pay, sick pay etc. They will be registered with HRMC as self-employed and be taxed accordingly. They may or may not need to be VAT registered. They are characterised by having a number of clients, will provide their own equipment and tools for the job and will invoice for payment.
A ‘worker’ is someone who has a contract or arrangement to do work or provide their services. A worker has the right to earn minimum wage and be entitled to 5.6 weeks holiday as well as statutory sick pay. They do not, however, have employment rights to the extent of being able to claim unfair dismissal, for example – this would only be applicable to an employee.
An employee is someone who is employed under a contract of employment (this does not have to be written). An employee has all the legal employment rights.
Many of the cases going through the courts now are an attempt at clarifying this position. Uber drivers are classed as self employed and therefore Uber does not have to pay Tax and NI on them as they are not employees. Nor are they bound by employment legislation including minimum wage etc. Some Uber drivers are claiming that in effect they are workers as their work is driven by the App they have to use and are bound by the rules Uber set down. This case is now at a high level and the decision will have an impact on others who work in the so called Gig Economy like Deliveroo drivers, Courier Drivers etc who all work on a self-employed basis.
The other high profile case involves Pimlico Plumbers. There someone who worked for them on a self employed basis is saying that in effect he wasn’t as Pimlico provided him with a van, his tools and gave him work and he was expected to work. This was heard at the Supreme court very recently. We wait the decision.