NCVO and Social Enterprise UK
“BWB Get Legal brings you a range of top-quality, affordable legal documents, available to download and customise to your specifications. Every document has been drafted by our expert solicitors.”
Get Legal

Employment Focus: Employees and Workers

In the first in our Employment Focus series, Bates Wells Braithwaite’s Louise Rea provides a comprehensive guide to employees and workers, examining their status and rights under employment law.

There are three main categories of employment status; “employees”, “workers” and the genuinely “self-employed”. On the scale of protection awarded by legislation; employees will be on the highest protection spectrum and self-employed individuals are on the opposite end of the scale with workers falling in the middle. This article provides some general guidance on the differences between employees and workers. We’ll be looking in detail at volunteers and the self-employed in future Employment Focus articles.

Employees

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" (section 230(1) Employment Rights Act 1996 (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" (section 230(2) ERA 1996).

The main distinguishing factors which have been established by case law are:

  • Personal service 

    an employee agrees to provide the service personally, and not to have the work done by somebody else. If the parties agree to enable the individual to provide a substitute to do the work, this will normally indicate that the relationship is closer to an independent contractor arrangement;
  • Mutuality of obligation

    the employer is required to provide work and to pay for it on a regular basis, and the employee is obliged to accept and carry out the work. The mutuality of obligations often becomes an issue in relation to casual workers, whether their irregular work amounts to employment. In some cases it is possible to establish an “overarching” contract of employment governing the times when a casual worker is actually working, and giving the employee the continuity of service, necessary for example to claim unfair dismissal. This is a complex area and each case should be assessed individually;
  • Control

    the employer exerts a degree of day-to-day control over the employee; for example directs an employee as to how, when and where the work needs to be done, monitors the employee’s attendance, and has the authority to discipline the employee. The level of control will vary depending on the seniority of the role, but in an employment relationship the ultimate authority rests with the employer;
  • Integration

    into the business; for example attending internal meetings, having a designated email address and telephone extension, being subject to internal policies and procedures and being included in training will all point towards an individual being an employee;
  • Other factors

    can help to point towards an employee or an independent contractor relationship - who provides and maintains the tools or equipment used by the individual, whether he or she bears any financial risks and has the responsibility to obtain insurance, whether he or she is paid for holiday or sickness and, whether the individual is allowed to work for someone else.

After two months’ service, employees are entitled to a written statement of particulars confirming their basic terms of employment. In practice, you should aim to provide this prior to the start of employment or as soon as possible afterwards.  You can find a precedent contract of employment here [insert link].  It is important that both you and the employee sign the contract and that you keep a signed copy in their personnel file.  However, this contract is only appropriate for employees and should not be used for workers or self-employed individuals. 

Workers

A worker is defined under section 230(3) ERA as “an individual who has entered into or works under …:

(b) contract of employment; or

(c) 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.”

A “worker” relationship can be identified by the following factors:

  • Personal service (with limited scope for substitution);
  • Mutuality of obligation;
  • The individual carrying out the work is not doing it in the context of a business undertaking. This means that the individual must not be providing services as an independent contractor, and the organisation or person receiving his or her work must not be a client or customer of that individual.

The main difference between an employee and a worker is a lower degree of control exercised by the “employer” and a lower degree of integration into the organisation; the relationship is more distant. If an individual fails to meet the “employment” test, he or she might still be classed as a worker and benefit from some statutory rights and protections. However, workers enjoy fewer rights than employees.

It should be noted that self-employment status for tax purposes is not conclusive and other factors can be taken into account to establish the true nature of the relationship. Examples of workers include casual workers and agency workers. 

Statutory rights and protections – employees and workers

 

Employee

Worker

Right not to suffer unlawful deductions from wages

Yes

Yes

Entitlement to National Minimum Wage

Yes

Yes

Statutory sick pay

Yes

No

Protection from discrimination

Yes

Yes

Family friendly rights (e.g. maternity, paternity, adoption leave and pay)

Yes

No

Maximum working week and rest breaks

Yes

Yes

Paid holiday

Yes

Yes

TUPE protection on a transfer

Yes

No

Statutory minimum notice period

Yes

No

Unfair dismissal rights

Yes

No

Statutory redundancy payment

Yes

No

Covered by ACAS Code of Practice on Disciplinary and Grievance Procedures

Yes

No

If you have any queries about employment status or require other types of contracts; such as a ‘zero hours’ contract, or a casual worker contract, you should get in touch with one of the Employment team.




Back to News