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Who Do You Think You Are? How Ambiguity Surrounding Employment Status Can Affect Employment Rights (2 February 2017)

Date: 02/02/2017
Duncan Lewis, Legal News Solicitors, Who Do You Think You Are? How Ambiguity Surrounding Employment Status Can Affect Employment Rights

Employment status is central to the exercise of employment rights. How an individual is categorised affects the rights that an individual can assert and the remedies that can be sought. The different types of status that exist – “employee”, “worker” and “self-employed” – creates confusion and uncertainty on both sides of the relationship. The lack of clear statutory definition for each category only reinforces this ambiguity. The status of “employee” provides the greatest statutory rights.

It has become more commonplace for employers in certain industries to adopt a “consultancy” (self-employed) type business model. Their aim is to engage people on a flexible basis who can choose when they work, who they work for and what they are paid for the work done. As there will be no obligation for the employer to offer work or for the individual to accept work, there is no employment relationship and the individual will have no, or limited, employment rights. Under this arrangement, fixed costs are kept to a minimum, as there will be no salary, no minimum wage, no automatic paid holidays, no minimum notice periods or benefits provided. Furthermore, it will be easier for the employer to terminate the relationship, as the individual will not be able to claim unfair dismissal.

The contract does not have to be in writing although it is preferable for this to be the case. To be an “employee” requires three factors to be evident, namely: the individual must provide personal service; the individual must be under the control of the business (in terms of where and the manner that the work is performed) and ; there must be “mutuality of obligation”. This last factor is the key to the relationship as the business must be obliged to offer work to the individual and the individual bound to accept it. To be a “worker’” the individual must personally carry out the work and he/she should be working for a person/organisation who is not in reality his/her client or customer.

In determining the status, the employment tribunals assess the substance of the relationship and not the label that it has been given. The employment tribunal adopt a multi-factorial approach, no single factor of which is conclusive. Amongst other things, an employment tribunal will consider whether an individual is:


  • Providing a personal service and has the ability to send a substitute;

  • Paid wages or a fee;

  • Paid net of income tax and national insurance contributions or gross;

  • Providing his or her own equipment;

  • Subject to the organisation’s disciplinary and grievance procedures;

  • Receiving sick pay or contractual holiday pay; and

  • In business on his or her own account or as an integral part of the employer’s business.

This approach gives the employment tribunal considerable scope in deciding a person’s working status. This can be seen by the recent employment tribunal decisions of James Farrar v Uber, Yaseen Aslam v Uber and Margaret Dewhurst v City Sprint (UK) Limited, where the employment tribunal looked at the day to day working relationship to find that there was a worker status rather than a self-employed one. Three further employment tribunal cases against Addison Lee, eCourier and Excel are awaiting decisions on similar issues. The decisions are not binding on future employment tribunals, but they provide a strong indication that in similar “consultancy” contracts, the employment tribunals are swaying in favour of the individual.

Until there are clear statutory definitions and judicial guidance relating to working status, there continues to be uncertainty where a business adopts the “consultancy’” type model. Whilst there are no guarantees that they will stand up to scrutiny, employers are advised to issue written contracts that reflect the reality of the working relationship.

Anthony Thompson, the author, is a Director in the Duncan Lewis Employment Department. Anthony is an accomplished employment lawyer with a proven track record of successfully advising individuals and employers on all aspects of employment law. He is also an experienced tribunal advocate and has a particular strength in advising on discrimination, having achieved notable successful results for both employees and employers.

Duncan Lewis employment lawyers act on behalf of claimants and respondents in all Employment Tribunal related matters. Our employment law specialists can represent all types of employers, large and small – as well as individual employees and groups of employees – in all matters, and they can offer clear legal advice at any stage of an employment matter. If you have a problem with employment, it is important to take legal advice and find out what your legal position is as soon as possible. For expert legal advice on employment law, call Duncan Lewis employment solicitors on 020 7923 4020.

You can also contact Anthony Thompson via email – anthonyt@duncanlewis.com – or telephone – 020 7014 7343.

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