Gary Smith, a plumber paid by the company, took Pimlico Plumbers to a court in a matter which ultimately ended up in the Supreme Court arguing that he was a worker and not self-employed – which Pimlico Plumbers had tried to assert – and therefore was entitled to certain employment rights including sick pay and holiday pay.
Pimlico Plumbers are, unsurprisingly, unhappy with the verdict and have said they will continue to fight the matter arguing for more clarity in the law.
This seems like a good point to revisit what we know about the law relating to employees, workers, and interns.
The last few decades have seen a rise in the number of people wishing to work flexibly – the so-called ‘gig economy’. This, coupled with the general economic downturn, has made employers look outside of the traditional full-time, permanent, 9 to 5 employee, and consider other options. This could include fixed long or short term temporary staff, interns, self-employed contractors, and casual ad hoc workers used on an as-and-when basis.
Normally, these sorts of flexible work patterns suit everyone involved, but what happens when it goes wrong? Does it matter if you call your hired labour an employee or a worker, or something else? Well yes, sometimes it does and here’s why. Most employers are aware that employees have legal rights. These include:
- Time off for emergencies
- Protection against discrimination
- Maternity rights and pay
- Not to have to work more than 48 hours a week (unless they choose otherwise)
- Sick Pay
- Parental leave and pay
- The right to flexible working
- Redundancy pay
But did you also know that those classed as ‘workers’ also have certain rights too? These include:
- Being paid at least the National Minimum Wage (or National Living Wage if over 25)
- Protection against unlawful deductions from wages
- Statutory paid holiday
- Rest breaks
- The right to not have to work more than 48 hours a week unless they wish to.
So while a ‘worker’ may not be able to bring a claim using employer/employee legislation, they are still perfectly able to take a business to court using other legislation.
Further, while the general presumption is that a self-employed worker has few rights in the workplace, they are still owed the same rights in relation to non-discrimination and health and safety as any other staff member.
The starting point for deciding what someone’s employment status is, is to look at the contract between the parties. Remember – a contract can be verbal as well as in writing and may be evidenced by things other than a formal contract document, for example, text messages, emails etc. For a contract of employment to be valid, and therefore an employer/employee relationship in place, there must to be three things present:
- The employer must have a measure of control over the employee.
- The employee must perform the work personally.
- The must be an exchange in place which lawyers sometimes refer to as a ‘mutuality of obligation’ (and HR managers call ‘MOO’); or more simply, the employee expects to perform their duties in return for the employer’s payment and vice versa.
The first one is the most straightforward. Generally, if a business dictates someone’s hours of work, place of work, break times, dress code etc, then this usually demonstrates the control element of the test.
The second element is, again, fairly clear. If you pay someone, for example, to clean your premises and you accept that they may sub-contract the work out to a third party, then you are probably not hiring an ‘employee’ in the legal sense.
The third element, mutuality of obligation, is by far the more problematic one. Historically, a starting place for the Tribunals has been to ask if there is an obligation upon the employer to provide the employee with work – or at the very least offer it as and when it becomes available – and whether the employee is then obliged to accept it. A worker or self-employed contractor may decline such work without incurring any penalty, an employee may not.
And while it is more difficult for a worker to bring a claim against an employer, it is certainly not impossible (ask Pimlico Plumbers!)
Courts have tended to look holistically at the whole of the relationship and day to day practices between the parties, and not just the words on the agreement. Just because a business manager believes they make something quite clear, it does not always follow that the employer/worker/contractor feels the same way, particularly if they think they have been treated badly.
As can be seen, this can be quite a complex area and for employers it is crucial to make sure that contractual documents are clear, up to date, and correctly reflect what both parties are agreeing All staff, whatever their status, should have proper terms and conditions, job descriptions, and be clear on what basis they are working as, often, what was agreed on a handshake six months previously may be difficult to evidence in the microscope of a Tribunal many months later without proper paperwork.
Are you clear on the difference between the employment statuses? If you would like more information then feel free to contact me.