In this legal update, we review the law on employment status. The law in England and Wales sets out three categories into which working individuals can be classified:
- workers; and
The Employment Rights Act 1996 gives the following legal definition of employees: an “employee” is someone who has entered into or works under a contract of employment.
The definition of a worker as set out in various laws, including the Working Time Regulations 1998, is someone who works under:
- a contract of employment, or
- or any other contract, where the individual agrees to carry out personally the work for the other party (as long as the contract is not a business to customer relationship).
The contract of employment or to carry out work personally can be implied if not expressly set out, and does not necessarily have to be in writing.
Workers are not employees, but have certain statutory rights, including the right to a minimum wage, holidays and the equality provisions in the Equality Act 2010.
An individual who provides works or services to a client or customer as part of his business would not qualify as an employee or worker. Sometimes the self-employed are referred to as independent contractors or individuals who work freelance.
Why does employment status matter?
Employment status is important because what category you belong to determines what sort of legal rights you have. If you are self-employed you will not benefit from the rights given to employees and workers.
Case law on employment status
In the case of Autoclenz v Belcher (2011), the Supreme Court confirmed the legal principle that the courts can look at the reality of the working relationship, and not just the contractual terms, when assessing a worker’s employment status. This means that, even if the contract says that the individual carrying out the work is to regarded as self-employed, if the reality demonstrates something different the courts may interfere and rule that the actual relationship is one of employer-worker or employer-employee.
In the recent case of two Uber taxi drivers, the employment tribunal applied the legal principle in Autoclenz in reaching its decision that that taxi drivers were workers. (Note that the decision is being appealed in the higher courts).
Remedy Solicitors is a London-based legal practice specialising in employment law. For more information on our services see our home page.