With the gig economy and zero-hours contracts it can be complex to define workers. Last year around 2.8 million people in the UK did at least some work in this economy. There have been a rising number of headlines and high-profile cases calling in to question the rights of individuals working for companies in this way. Companies such as Uber, JD Wetherspoons and McDonalds have also recently been facing employees taking industrial action over pay and precarious contracts. No employer wants to be trending on social media or facing an employment tribunal because they are issuing the wrong contracts to people or inadvertently exploiting them because they are on the wrong type of contract.
The Government’s position on the gig economy
The Government commissioned Matthew Taylor to lead an independent review examining “how employment practices need to change to keep pace with modern business models”. The Taylor Review of Modern Working Practices considers 3 broad areas:
1. Whether there is clarity in the rules and legislation pertaining to employment status, including whether legislative changes are necessary.
2. How exploitation in atypical forms of work, including in the “gig economy” might be prevented, ensuring workers receive fair treatment and due rights and protections.
3. How incentives might be shifted to produce different, beneficial outcomes for workers, companies and the economy.
Three main categories of a paid worker
An individual who is doing paid work will fall into one of the following categories:
- An employee
- A worker
- Self-employed
An employee
The majority of people in work are employees. They are classed as employees if they work under a contract of employment, this can be oral or written, express or implied and they have recognised rights and duties. Best practice for an employer is to ensure that an employee has a written contract. Employed individuals can work full time hours, part-time hours, flexi-time or remote working.
Employees have access to the full range of rights and entitlements under UK employment law. These include: protection against unfair dismissal; statutory redundancy payment; maternity and paternity leave and pay; parental leave; the right to request flexible working; rights under TUPE and rights to preferred payments in the event of an employer’s insolvency.
Not all of the rights afforded to ‘employees’ are available from day one of their employment and a minimum period of continuous work may apply. Visit Acas for more information on contracts of employment.
A worker
Workers are classed as an individual who undertakes to do work or carry out a service for another party. This work if often undertaken on an occasional or ad-hoc basis for a business. They are often termed as ‘casual’ or ‘zero-hours’. Agency workers and short-term casual workers are usually termed as a worker, unless they are found to be self-employed.
A worker does not have all of the legal rights that employees do. They are entitled to statutory requirements including the National Minimum Wage, paid annual leave, rest breaks and protections for part-time workers etc. They may also be entitled to maternity, paternity, adoption and shared parental leave pay, but they will not usually get the associated leave that employees get. They aren’t usually entitled to a minimum notice period and a worker has limited rights against unfair dismissal.
Self-employed
A self-employed individual is someone who is running their own business and takes responsibility for its success or failure. They aren’t paid through PAYE and they don’t have the employment rights and responsibilities of employees. They are responsible for their own conditions of work and costs of obtaining and performing that work.
A person can be both employed and self-employed at the same time, for example, they may work for an employer during the week and run their own business at the weekends.
Although they don’t have the same rights as an employee or worker they still have protection for their health and safety, in some cases they have protection against discrimination. Their rights and responsibilities are set out by the terms of the contract they have with their client.
Guidance for employers
The status of any worker is usually laid out in a contract or agreement, however, at an employment tribunal they would examine the day-to-day working patterns and practices to determine the legal employment status. It is always good practice for employers to review their workforce and consider whether the activities undertaken by workers are appropriate to the status under which they are employed. For example, if an individual is classed as self-employed ask yourself can the individual turn down work offered? Can they choose their own hours? Do they provide their own equipment to carry out the work?
When did you last review your current workforce or update contracts, why not contact us to help ensure you are up-to-date?