Growth Through People: Navigating employment status

Aston University

It is essential to know who is and is not an employee in your organisation. This is because employees have many more rights than workers and self-employed contractors. For example, employees can claim unfair dismissal and have the right to a statutory redundancy payment if they are made redundant. However, self-employed contractors have limited rights, such as those relating to data protection and health and safety.

The status of worker has become increasingly important since the ruling that Uber drivers are workers. They do not have as many rights as employees, but importantly they are entitled to the National Minimum/Living Wage and they are covered by the law relating to working time (therefore they get paid holidays). With the focus that the Uber case has brought to employment status there has never been a better time to be clear about the way it is determined by the Employment Tribunal.

If an Employment Tribunal is asked to determine whether someone is or is not an employee they will look at how the employment relationship is actually working.

There are two tests that will be applied – the multiple test and the mutual obligations test.

The multiple test asks three questions:

  1. Is the individual under the control of the employer?
  2. Is the individual required to provide work personally?
  • Is there any term that is inconsistent with employment?

Terms that are inconsistent with employment include an individual paying their own tax and national insurance, invoicing for work that is done or providing their own equipment.

The Employment Tribunal will look holistically at the relationship and consider whether the way that it is being conducted is one of employment.

The mutual obligations test asks two questions:

  1. Is the employer obliged to provide work?
  2. Is the employee obliged to do the work that is offered?

This is often seen as the very basic requirement of employment status. We can see, from applying this, why individuals working on zero hours contracts are not deemed to be employees. The very basis of a zero hours contract is that work is only offered when it is available, and there is no obligation on the employer to provide any work. So, the requirements in this test are not met.

It is important to note that sometimes an employer and an individual start out with no intention of the individual being an employee. However, over time a regular pattern of working develops. The individual can become an employee although that was not planned.

Going back to the Uber case, it was decided that the individuals were workers. What does this mean? The definition of a worker is not particularly clear, but it is seen as someone who does not meet the full definition of an employee but is certainly not running a business on their own account.

If you have individuals working in your organisation who you think are self employed check the way that they are working against these tests. If they have actually become employees do be aware that they have a wide range of employment rights.