Zero Hours Contracts and Worker Status Reforms Stuck in the Mire

There appears to have been very little movement on zero hours contracts and worker status reforms despite various consultations, published reviews, policy papers and the mention of a new Employment Bill in the 2019 Queen’s Speech.

Reform Delays

The Good Work Plan

On 17 December 2018, the government published its policy paper, the Good Work Plan. This set out what the government described as “the biggest package of workplace reforms for over 20 years”. It built on the response given by the government to the Taylor Review in February 2018 and the government’s strategy was set out in three main themes:

  • fair and decent work;
  • clarity for employers and workers; and
  • fairer enforcement.

To help UK Employers prepare, we summarised the key aspects of The Good Work Plan that came into effect from 6 April 2020 – What UK Employers Need to Know About the Good Work Plan

Zero Hours Contracts Reform

Also included in The Good Work Plan were several commitments specifically relating to zero hours contracts including a right for those on zero-hours or other flexible contracts to request a more stable and predictable contract and making it easier for casual staff to establish continuity of employment.

In its Spring 2022 Labour Market Outlook survey of employers, the CIPD added several questions to the survey, specifically relating to the use of zero hours contracts, and on 11 August 2022 it published a new report titled Zero-hours contracts: Evolution and current status.  The report, which suggests that the number of workers engaged on zero hours contracts is small, accounting for about 3% of total employment, and has changed little since 2015, reflects on how zero hours contracts are used and considers their benefits and drawbacks for employers and workers.

The report concludes by making four recommendations:

  • Introduce a right for variable hours workers to request a more stable contract or working arrangement after they have been employed for six months.
  • Create a statutory code of practice on the responsible management of zero hours workers, including a requirement to pay compensation if workers’ shifts are cancelled at short notice.
  • Improve labour market enforcement, including through the creation of a single enforcement body and a stronger focus on supporting employer compliance.
  • Abolish worker status to help clarify and enhance employment rights for zero hours workers and more widely.

Employment Status Reform

Employment status was the subject of a standalone consultation in February 2018 and was also one of the key areas looked at in the Taylor Review.  The Taylor Review proposed that the definition of “worker” needed to be clearer and more consistent, and that workers who were not employees should be renamed in the legislation as “dependent contractors”. It also proposed that there should be less emphasis on personal service, and more emphasis on control, in defining the relationship between an employer and a dependent contractor. This is because of concern that employers are putting a right of substitution into contracts in order to defeat arguments over worker status.

A commitment to refine employment status tests and for an online status tool to be developed were included in the government’s policy paper, The Good Work Plan, and the government suggested that it would “legislate to improve the clarity of the employment status tests, reflecting the reality of modern working relationships”.

However, the government response to the standalone consultation was not published until July 2022, and when it finally appeared it had very little to say about how it intended to produce the clarity of the employment status tests and it suggested that the benefits of creating a new system would be outweighed by the risks associated with legislative reform.

In July 2022, the government confirmed that it would not be reforming legislation in this area or aligning the employment law and tax status tests (there is no third category of “worker” for tax purposes). It instead published new guidance designed to improve clarity around employment status, which comprises three parts:

Employment status and employment rights: guidance for HR professionals, legal professionals and other groups (Detailed status guidance).

Employment status and rights: support for individuals (Guidance for individuals).

Employment status and rights: checklist for employers and other engagers (Guidance for employers).

The guidance is non-statutory and does not change the legal position. The introduction to the detailed status guidance emphasises that only a court or tribunal can make a final decision on employment status for employment rights purposes.

The Employment Bill

The recommendations in the CIPD report mirror those that were previously set out in previous reviews and the Good Work Plan in 2018, and it was expected that the much-awaited Employment Bill announced in the Queen’s Speech in December 2019 would see many of the recommendations implemented.

On 23 March 2021 the government confirmed that the Employment Bill would not be introduced in that parliamentary session and that it would be introduced when parliamentary time allows.  There was no mention of the Employment Bill in the two subsequent Queen’s Speeches (May 2021 and May 2022) and no timeframe for when the Bill may be introduced has been provided.

On 14 June 2022, Lord Callanan, Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (BEIS), reconfirmed that the Employment Bill will be delivered “when parliamentary time allows”, and suggested that the government is considering alternative options for delivering its manifesto commitments outside of the anticipated Employment Bill.

Whether the government finds time to move forward with its Employment Bill remains to be seen but, in the meantime, the unresolved issues surrounding zero hours contracts and employment status will continue to present challenges for employers and workers alike and resolving disputes in these areas may ultimately be up to the courts and tribunals.

Do You Need Assistance?

The specialist employment law team at Employment Law Services (ELS) LTD have extensive experience in advising UK Employers to ensure compliance with a broad range of employment law issues.  If you have any queries about your legal obligations you can call us on 0800 612 4772, Contact Us via our website or Book a Free Consultation online.

Uber to Pay Drivers Minimum Wage, Holiday Pay & Pensions

After losing it’s lengthy Supreme Court battle just less than one month ago, Uber have announced it will give its 70,000 UK drivers a guaranteed minimum wage, holiday pay and pensions.

Uber Ruling

Last month we confirmed Uber’s lengthy legal battle to overturn the 2016 Employment Tribunal (ET) decision had finally came to an end when the Supreme Court unanimously ruled against them and concluded drivers should be classed as workers, not independent third-party contractors – https://employmentlawservices.com/uber-loses-landmark-supreme-court-battle-over-workers-rights/

In the weeks following the Supreme Court’s ruling, Uber have carefully considered their position and announced yesterday that it will give its 70,000 UK drivers guaranteed minimum wage, holiday pay and pensions. The taxi company confirmed that all drivers can expect to earn at least the National Living Wage for over-25s, irrespective of age, after accepting a trip request and after expenses, that they will be entitled to paid holiday based on 12.07% of their earnings, which will be paid on a fortnightly basis, that they will also be enrolled into a pension plan automatically, with contributions from Uber, that they will continue to receive free insurance in case of sickness or injury as well as parental payments, which have been in place for all drivers since 2018 and retain the freedom to choose if, when and where they drive.

It will be interesting to see if Uber will extend this decision to its food delivery business, Uber Eats, which remains unaffected by this decision.

The Supreme Court ruling in this case was always going to have far-reaching implications for millions of people working in the gig economy and the companies that employee them, but only time will tell whether other employers operating in the gig economy will follow Uber’s lead.

 

Uber Loses Landmark Supreme Court Battle Over Workers Rights

Uber has lost its battle in the Supreme Court over drivers’ rights – a decision that could have far-reaching implications for millions of people working in the gig economy.

Back in November 2017 we reported that the Employment Appeal Tribunal (EAT) rejected taxi firm Uber’s attempt to overturn the 2016 Employment Tribunal (ET) ruling that two drivers who were employed as gig-economy contractors by Uber should have been classed as ‘workers’ under the Employment Rights Act 1996, not as self-employed. At the time, Uber made it clear that they intended to appeal and after failing to overturn the EAT’s decision at the Court of Appeal, the case was heard by the Supreme Court on 21 and 22 July 2020. 

Supreme Court Judgement in the Uber Case

On 19 February 2021, Uber’s lengthy legal battle to overturn the 2016 Employment Tribunal (ET) decision finally came to an end when the Supreme Court issued its Judgement.  The UK’s highest court unanimously ruled against Uber and concluded drivers should be classed as workers, not independent third-party contractors, which means they are entitled to basic employment protections, including minimum wage and holiday pay.

In the 42-page Judgement, the court rejected Uber’s argument that it merely acted akin to a booking agent for drivers, noting that the company would have no means of performing its contractual obligations to passengers (nor complying with its regulatory obligations as a licensed private hire vehicle operator) — “without either employees or subcontractors to perform driving services for it”.

The Full Supreme Court Judgement

Implications the Supreme Court Judgement Will Have for Other Employers

The Supreme Court’s judgement is likely to cause massive implications as other companies with large self-employed workforces may now face very similar action, particularly companies like Deliveroo and UberEats who engage drivers to deliver food. It is expected that organisations who have adopted a similar model to Uber will now discover that they owe a substantial amount more to their workers, such as paid annual leave, national minimum wage and sick pay.

Understanding Employment Status

An increase of atypical contracts has effectively blurred the lines between self-employed and employed status and so employers should be very careful when entering into any sort of working relationships. A basic explanation of each status/category is as follows:

Employee:  Under section 230(1) of the Employment Rights Act 1996 (ERA 1996) an employee is defined as “an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment”. Under section 230(2) of ERA 1996, a contract of employment means “a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing”.

Worker:  A worker is defined under section 230(3) of ERA 1996 as an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment; or any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.

Self-Employed:  A person is self-employed if they run their business for themselves and take responsibility for its success or failure and they aren’t paid through PAYE.

Significance of Making the Correct Distinction

The distinction between the three categories is significant for a number of different reasons, including the following:

1) Employers and employees have obligations that are implied into the contract between them (for example, the mutual duty of trust and confidence). Some core legal protections only apply to employees, most particularly the rights on termination of employment granted under ERA 1996 (the right not to be unfairly dismissed and the right to receive a statutory redundancy payment). As mentioned above (see Worker status), workers enjoy limited protection under employment law.

2) Only employees are covered by the Acas Code of Practice on Disciplinary and Grievance Procedures

3) Only employees will be automatically transferred to any purchaser of their employer’s business under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246).

4) The tax and social security treatment of a person providing services depends on their status.

5) An employer is vicariously liable for acts done by an employee in the course of their employment. This vicarious liability is unlikely to extend to independent contractors or self-employed individuals.

6) An employer is required to take out employer’s liability insurance to cover the risk of employees injuring themselves at work. Self-employed individuals or independent contractors may not, in every case, be covered by this insurance and may want to consider entering into appropriate insurance for their own benefit.

7) Employers owe employees statutory duties relating to health and safety. Independent contractors may not be covered under these duties although they will be covered under the employer’s common law duty of care in respect of occupier’s liability.

We have previously commented on the importance of understanding Employment Status, the risk of getting it wrong and what you can do to avoid the risks.

Advice & Guidance for Employees & Employers

Employees, workers and self-employed workers enjoy a variety of different legal entitlements, and since many of these rights form the basis of the employment status, the consequences of getting an individual’s employment status wrong should not be underestimated.

2019 Budget: National Living Wage set to increase by almost 5%

The National Living Wage, which is the statutory minimum wage for those aged 25 and over, has to rise to £8.21ph from April 2019 – which means an additional £690 annually for low paid workers.

The Low Pay Commission (LPC), which recommended the increase, have anticipated that the increase will see almost 2.4 million workers throughout the UK better off.

In addition, the Government have accepted all of the LPC’s recommendations for the following NMW rates:

• 21- to 24-year-olds will increase by 4.3% from £7.38 to £7.70 per hour;
• 18- to 20-year-olds will increase by 4.2% from £5.90 to £6.15 per hour;
• 16- to 17-year-olds will increase by 3.6% from £4.20 to £4.35 per hour;
• Apprentice rates will increase by 5.4% from £3.70 to £3.90 per hour; and
• The accommodation offset will increase by 7.9% from £7.00 to £7.55.

“The increase in the national living wage (NLW) to £8.21 in April 2019 will ensure a pay rise for the lowest-paid workers that exceeds both inflation and average earnings.

“Over the past year, the labour market has continued to perform well and the economy, while subdued, has met the criteria of ‘sustained growth’ set out in our remit for the NLW. We therefore recommended an increase in line with a path to 60 per cent of median earnings by 2020.” Said Sanderson, who is the chair of the LPC.

He added further: “We recommended real-terms increases to the national minimum wage (NMW) rates for younger workers and apprentices, as the labour market conditions for these groups remain strong. These rates will continue to rise faster than both inflation and average earnings.

“We opted for smaller increases than we recommended last year because of slightly weaker labour market conditions for young people, combined with insufficient evidence to fully understand the impact of the largest increases in a decade implemented in April of this year. However, next year’s will still be some of the highest increases on record.”

How can Employment Law Services (ELS) Help?
If you are an employer who requires assistance with any of the issues raised in this blog contact us today for your free consultation 0370 218 5662.

Employment Tribunal Guidance for Employers

The Employment Tribunals (ET) are an independent judicial body established to resolve disputes over employment rights between employers and employees. Claims likely to be heard in the ET will involve matters on unfair dismissal, discrimination, wages and redundancy payments.

In July 2017, the Supreme Court unanimously held that ET fees were unlawful and must be quashed. In September 2018, the Ministry of Justice (MOJ) published tribunal statistics for April-June 2018 and across the boards the numbers are up!
Key figures include:

• Number of single claims lodged increased by 165% compared with the same quarter last year.
• The number of single claims outstanding rose by 130% compared with the same quarter last year.
• There have been 12,400 fee refund payments made since the fee refund scheme was introduced, totalling just over £10m.
• Disability discrimination cases had the largest average award (£30,700). Religious discrimination claims had the lowest average award (£5,100). The average award for unfair dismissal awards was £15,007.

If you are an employer and you have received an ET claim, it is crucial you act quickly and carefully to place yourself in the best position to defend the claim, or to reach a fair settlement agreement with the employee. At Employment Law Services (ELS), we have set out 5 top tips that should be applied when responding to a claim.

(1) Address the claim immediately

A tribunal claim is not something that should be set aside to deal with at a later date. Employers should have procedures in place to make sure that, when an ET1 is received, it is immediately brought to the attention of the appropriate people.
An employer should then make the decision on who is going to have the responsibility for dealing with the claim and begin working on the response.

An employer’s response should arrive at the ET office, on the appropriate form (an ET3), within 28 days of the date on which the claim was sent out.

(2) Evaluate the merits of the claim

Employees cannot submit an ET claim unless they have contacted the ACAS early conciliation service in the first instance. If both parties have gone through this process, the employer will probably already have knowledge of the employee’s complaint and had the opportunity to process its merits.

In this event, the employer should carefully carry out an assessment of the employee’s complaint and what defence they may have and then decide whether to fight the case or not.

Sometimes, employers discover that a settlement agreement is the less expensive option when weighing the costs of defending an ET claim. Settlement agreements are legally binding contracts which can be used to end an employment relationship on agreed terms. Once this document has been signed, the employee won’t be able to make an ET claim about any type of claim which is listed on the agreement.

(3) Focus on the issues relevant to the case

When responding to an ET complaint, it is crucial that employers focus on the employees specified allegations and any legal issues that may surround this. An employer’s response should be carefully drafted in as much detail as possible as they may not get the opportunity to introduce more information at a later date.

(4) Pay attention to detail

Whoever is in charge of drafting the ET3 must ensure that there are no inconsistencies and that all statements are factual and supported by the correct evidence.

(5) Submit the ET3 on time

An employer’s response form (ET3) should be submitted within 28 days of receiving the claim. This form can be submitted by using the online submission tool or returning the paper form.

The main thing to remember here is to ensure the tribunal office receive the form before the deadline, the form should not be sent on the 28th day. Employers may have the opportunity to apply for an extension, but this will be permitted at the judge’s discretion.

Fixed Fee ET work

Defending Employment Tribunal claims, or threats of a claim can be costly, but it doesn’t need to be. with Employment Law Services (ELS)’ Fixed Fee Employment Tribunal Representation offering, employers can save time and money. We understand how expensive, stressful, time consuming and distracting defending an Employment Tribunal Claim can be, even before the case ever reaches the hearing stage.

Negotiating the employment tribunal rules & procedures can be confusing & difficult but it doesn’t need to be. With our Fixed Fee Employment Tribunal Representation offering, employers can save time and money.

We believe this approach helps you control costs, minimise stress and wasted time and management resources, allowing you to continue to focus on your core business.

If you are faced with an Employment Tribunal claim, or threat of an Employment Tribunal Claim, Employment Law Services (ELS) can help. If you are an employer who requires assistance with any of the issues raised in this blog contact us today for your free consultation 0370 218 5662.

Time off for dependants: advice for employers

From the first day of employment all employees have the right to time off to care for a dependant. Under s57a and s57b of the Employment Rights Act, all employees are entitled to a “reasonable” amount of unpaid leave. However, what is deemed as reasonable can be fact specific.

Who is a dependant?
A dependant is someone who relies on the employee for care, which can vary from a spouse, partner, child, parent or someone who depends on the employee, for example an elderly neighbour.

When can time off be taken?
• When a dependant falls ill, gives birth, is injured or assaulted;
• To make care arrangements for a dependant who has fallen ill or is injured;
• In consequence of the death of a dependant;
• To deal with an incident that concerns a child of the employee whilst in care of an educational establishment.

How much time off can an employee take?
An employee will be entitled to a reasonable amount of time off to deal with the emergency, but there is no set amount of time as it depends on the situation.
For example, if a dependant falls ill, an employee can take time off to take that child to the doctors and make care arrangements. An employer may then ask the employee to take parental or annual leave if they wished to stay off with the child for longer.

Does the employee have to give notice?
The employee does not need to give notice; however, they should provide the employer with a reason for the absence as early as possible and when they anticipate their return to work.

Should the employee be paid for this time off?
No, an employer does not have a statutory obligation to pay employees for time off to care for dependants.

An employer must not:
• Treat employees unfairly for taking time off, for example refusing them training or promotion;
• Dismiss an employee or choose them for redundancy because they asked for time off for a dependant;
• Refuse an employee reasonable time off.

How can Employment Law Services (ELS) help?
If you are an employer who requires assistance with any of the issues raised in this blog contact us today for your free consultation 0370 218 5662.

Understanding Employment Status, The Risks of Getting it Wrong and What You Can Do To Avoid Them

UK employment laws are extremely complex and with the government introducing regular changes, many UK employers often struggle to keep up to date and keep their business compliant.

The thought of complying with these complex UK employment laws often leaves business owners concerned and unsure about employing staff directly and so many choose instead to use self employed workers, thinking this means they won’t need to worry about typical employment related matters… but it’s not that simple!

An increase of atypical contracts has effectively blurred the lines between self-employed and employed status and so employers should be very careful when entering into any sort of working relationships. A basic explanaiton of each status/category is as follows:

Employee:  Under section 230(1) of the Employment Rights Act 1996 (ERA 1996) an employee is defined as “an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment”. Under section 230(2) of ERA 1996, a contract of employment means “a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing”.

Worker:  A worker is defined under section 230(3) of ERA 1996 as an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment; or any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.

Self-Employed:  A person is self-employed if they run their business for themselves and take responsibility for its success or failure and they aren’t paid through PAYE.

Significance of the distinction

The distinction between the three categories is significant for a number of different reasons, including the following:

1) Employers and employees have obligations that are implied into the contract between them (for example, the mutual duty of trust and confidence). Some core legal protections only apply to employees, most particularly the rights on termination of employment granted under ERA 1996 (the right not to be unfairly dismissed and the right to receive a statutory redundancy payment). As mentioned above (see Worker status), workers enjoy limited protection under employment law.

2) Only employees are covered by the Acas Code of Practice on Disciplinary and Grievance Procedures

3) Only employees will be automatically transferred to any purchaser of their employer’s business under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246).

4) The tax and social security treatment of a person providing services depends on their status.

5) An employer is vicariously liable for acts done by an employee in the course of their employment. This vicarious liability is unlikely to extend to independent contractors or self-employed individuals.

6) An employer is required to take out employer’s liability insurance to cover the risk of employees injuring themselves at work. Self-employed individuals or independent contractors may not, in every case, be covered by this insurance and may want to consider entering into appropriate insurance for their own benefit.

7) Employers owe employees statutory duties relating to health and safety. Independent contractors may not be covered under these duties although they will be covered under the employer’s common law duty of care in respect of occupier’s liability.

Increasingly, disputes over the definition of working relationships between individuals and Employers are being referred to Employment Tribunals where preliminary hearings are being used to determine the legal definition and, in many cases, businesses who thought they were contracting self-employed individuals have found they are actually employing them and so immediately find themselves subject to the full range of UK employment law.

Employee who accepted £200 to become labour-only subcontractor was a worker entitled to holiday pay

In a recent case at the Employment Appeal Tribunal, the EAT upheld an employment judge’s decision that a general labourer, who was employed for four years before accepting £200 in exchange for becoming a labour-only subcontractor for the same company, was a worker for the purposes of the Employment Rights Act 1996 and the Working Time Regulations 1998 (SI 1998/1833). The tribunal therefore had jurisdiction to hear his claims for unlawful deductions in respect of unpaid holiday pay.

The employment judge had been entitled to find that the necessary mutuality of obligation existed during each assignment or period of work undertaken. There had been no express provision about substitutes being permitted and, on the evidence, the employment judge had found that this did not occur. Accordingly the requirement for the personal performance of work had been met. The labourer did not actively market his services to the world in general and had been recruited by his former employer to work as a member of its workforce under a supervisor at particular sites or to transfer goods between sites. The requirements of integration and control had therefore also been met. (Plastering Contractors Stanmore Ltd v Holden UKEAT/0074/14.)

Lack of mutuality of obligation between assignments irrelevant to whether court interpreters were “in employment” for discrimination purposes

In another recent case heard by the Employment Appeal Tribunal, the EAT overturned a tribunal’s decision that two interpreters, who performed regular assignments for HM Courts and Tribunals service (HMCTS), were not “in employment” under the Equality Act 2010 and were therefore unable to pursue race discrimination claims. The tribunal had misdirected itself in taking into account an irrelevant factor; the absence of mutuality of obligation between the interpreters and HMCTS between assignments. The key question for discrimination purposes was whether the interpreters, when engaged, were employed “under a contract personally to do work”.

The EAT remitted the case to the same tribunal to consider afresh whether the interpreters provided their services to HMCTS “in a position of subordination”. If they did, their discrimination claims could proceed. On the other hand, if they were truly independent providers of services to the world at large and HMCTS was merely one of their professional clients, they would not be protected. (Windle v Arada and another UKEAT/0339/13.)

So how can employers work out whether the working relationships they have with individuals are that of employer/employee or employer/self-employed?

Over the years, various different tests have been used to determine the nature of working relationships between individuals and Employers including the ‘Control Test’, the ‘Integration Test’ and the ‘Economic Reality Test’ but these days, preliminary hearings held by Employment Tribunals use the ‘Multiple Factor Test’.

The ‘Multiple Factor Test’ looks at a number of different factors opposed to just one or two. The factors normally taken into consideration include but are not limited to the following:

1) Does the worker receive a regular wage or a one off payment or fee?

2) Can the employer dictate the place of work and the way it is to be carried out, in other words what is the employer’s degree of control in the relationship?

3) Does the employer have the right of exclusive service?

4) Does the employer have the right discipline and the power to dismiss the worker?

5) Who owns the tools or other means of production?

6) To what extent is the employer obliged to provide work for the worker to perform and to what extent is the worker obliged to accept such offers of work? Commonly known as ‘mutual obligations’.

Recent case law suggests that the minimum criteria to establish a contract of employment is mutuality of obligations and control but this is no guarantee that the presence of these two criteria means there is definitely an employer/employee relationship. However, if either of these is missing then there won’t be an employee/employer relationship.

The Importance of Having a Contract

It is critical that employers correctly determine the nature of the working relationship they have with their workers and then review their contracts to ensure they are compliant with current legislation and are what they actually were intended to be.

The concept of a contract of service is one explored extensively in case law, where it is distinguished from a contract under which a person gives service as an independent contractor under a contract for services.

The terms “contract of service” and “contract for services” carry no statutory definition and the category into which a particular contract falls is determined according to case law. In very simple terms, under a contract of service a person agrees to serve another, whereas under a contract for services they agree to provide certain services to the other. However, that simple formulation is the start, not the conclusion, of the legal analysis.

Key Points Employers Should Consider

1) The nature of the duties that can, and cannot, be delegated – both in terms of the proportion of those duties to the rest of the duties and whether they are the “dominant purpose” of the agreement. If the duties that can be delegated are the dominant purpose of the agreement, it is unlikely to be a contract of service.

2) When the right to delegate will arise, whenever the individual chooses or just when they are unable to do the work.

3) Who organises and pays the substitute.

4) Whether the right to delegate is subject to any limitations, in particular as to who can be used as a substitute.

5) Whether the individual would be able to profit from delegating the duties (that is, whether they could pay any substitute less than they receive themselves).

6) The absence of mutual obligations (that is, to provide work and to do it) is also likely to be fatal to a finding of a contract of employment. While this would appear to rule out any contract of employment existing between parties who have not contracted with each other at all, where the individual is supplied to work for an organisation by an intermediary such as an employment business, which sits in the middle of the contractual chain, the possibility of an implied contract between an individual and the organisation to which they actually give their services is now a possibility and will be considered by employment tribunals.

7) Where a person works under a series of short-term contracts, it is possible that each of those could be a contract of service, even if it is short and temporary. Similarly, it may be necessary to assess the overall nature of the relationship to determine whether an over-arching employment contract exists due to sufficient mutuality of obligation in the period between periods of work.

8) The degree of control exercised by the organisation over the worker will always be a relevant factor. However, control is unlikely to be the only relevant factor. The tribunals or courts are likely to create a picture from which it is necessary to step back in order to form an overall view.

How Can You Avoid Getting Caught Out?

  • Contact Us – we will undertake full review of your current arrangements and provide you with our findings and recommendations
  • Ensure you have approproraie contracts should be drafted and issued to ensure the nature of the working relationship is clearly determined.
  • Give us a call on 0800 612 4772 and we’ll help you to prevent problems and protect your business.