Fairness Agenda: Comparison of employee, worker and self-employed status and rights

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1 Fairness Agenda: Comparison of employee, worker and self-employed status and rights Employment status is increasingly topical with the rise of the gig economy and greater numbers of self-employed workers than ever before. This interactive aide-memoire compares key characteristics and rights applying to the three most common working relationships between an organisation and individual, of employee, worker and self-employed contractor. The legal analysis and examples given reflect the law as at 1 July In November 2016, Government commissioned Matthew Taylor to review Modern Workplace Practices. Matthew Taylor is expected to report on his review shortly and we will circulate further commentary when his review is published. Click to continue

2 Current types of status and rights

3 Current types of status and rights Key statutory rights Key characteristics Example > Required to provide services personally > Dependent relationship between employer and employee > has limited autonomy > Obligation on the employer to provide work and the employee to perform it > Employer absorbs risks (for example, errors or incompetence) > Can be engaged on temporary or fixed-term arrangements > Can be full-time, part-time or engaged on a flexible work pattern > Note that all employees are also workers. Not all workers are employees Statutory rights Click on the icon opposite to reveal statutory rights Rachel is hired as an IT support engineer at a consultancy, Good Work Limited. She works fixed hours on 4 days a week, one of which is worked at home. Rachel is assigned tasks by her supervisor on a regular basis. She must be available to work at the times agreed and cannot send or allow someone to work shifts in her place. Analysis Rachel must provide her services personally and has little autonomy over when and how she carries out her work. Rachel s relationship with Good Work is one of employment. What to watch out for > s must be paid through PAYE > s have comprehensive statutory rights

4 Current types of status and rights Key statutory rights Key characteristics Example All employees will be workers, plus individuals to which all of the following applies; > Personally required to provide work or services to or as part of the business to whom contracted > No or limited right of substitution > Contracts individually or through a service company > The contracting business is not a client/customer of the independent contractor s profession/business undertaking Ross, who has significant experience and expertise in developing online databases is hired by Good Work Limited to work on the roll-out of a new jobs database. He will work alongside a team of colleagues employed by Good Work, for 30 hours a week, at times to suit his personal schedule. He will be paid a monthly fee, as well as a significant sum at the end of the roll-out and provided it is successful. Statutory rights Click on the icon opposite to reveal statutory rights What to watch out for > contractors may still be entitled to worker rights, depending on the way they provide their services > status may still apply if an individual has only a limited right to substitute another to provide the services > Method of payment (whether through invoice or PAYE) is not determinative of status Analysis Good Work will not dictate Ross work schedule and Ross is taking some financial risk. These factors point away from a relationship of employment. However, Ross has been hired for his personal expertise. He cannot delegate his work to someone else or work for any other organisation. This means that Good Work is unlikely to be his client. Ross is more likely to be a worker engaged by Good Work.

5 Current types of status and rights Key statutory rights Key characteristics Example > Individual paid on receipt of invoice rather than through PAYE > Contracts individually or through a service company > Provides services to clients/customers (whether personally or otherwise) as part of their own business. Relevant factors include: > > entering into a commercial relationship with the client/customer; > > taking a degree of financial risk; > > working for a number of clients Statutory rights Click on the icon opposite to reveal statutory rights What to watch out for > The label self-employed contractor will not determine the nature of the relationship if the way the relationship is operated in practice is not consistent with status Monica is hired to advise Good Work Limited on possible upgrades to the company s online job marketing software. Monica has set up a small business, MarketingforU, through which she provides her services. MarketingforU, will conduct a review over a period of three months and then present its findings and proposals to the board. Monica is not required to do all the work on this project herself and can utilise her team at MarketingforU. She will receive a oneoff consulting fee, irrespective of the hours worked on the review. Analysis Monica is not required to provide her services personally on this project and there are no fixed hours during which Monica or her colleagues are required to work. Monica and her business, rather than Good Work Limited will manage the day to day organisation and management of the project. Monica is self-employed and Good Work Limited is her client.

6 Key statutory rights Menu Show all Working pattern in not indicative of working status: Part-time Full-time Temp Permanent Flexible work pattern Home-worker * Limited exceptions apply

Contacts Employment Group Jillian Naylor

(+44) 20 7456 4421 laurie.braim@linklaters.

7 Contacts Employment Group Jillian Naylor Partner Tel: (+44) Simon Kerr-Davis Counsel Tel: (+44) Gemma Parker Senior PSL Tel: (+44) Nicola Rabson Global head of the Employment and Incentives practice Tel: (+44) David Speakman Counsel Tel: (+44) Laurie Braim Managing Associate Tel: (+44) Jean Lovett Partner Tel: (+44) Julie Sharp Counsel Tel: (+44) Alison Sneddon Associate Tel: (+44)

8 linklaters.com This publication is intended merely to highlight issues and not to be comprehensive, nor to provide legal advice. Should you have any questions on issues reported here or on other areas of law, please contact one of your regular contacts, or contact the editors. Linklaters LLP. All Rights reserved 2017 Linklaters LLP is a limited liability partnership registered in England and Wales with registered number OC It is a law firm authorised and regulated by the Solicitors Regulation Authority. The term partner in relation to Linklaters LLP is used to refer to a member of Linklaters LLP or an employee or consultant of Linklaters LLP or any of its affiliated firms or entities with equivalent standing and qualifications. A list of the names of the members of Linklaters LLP together with a list of those non-members who are designated as partners and their professional qualifications is open to inspection at its registered office, One Silk Street, London EC2Y 8HQ or on and such persons are either solicitors, registered foreign lawyers or European lawyers. Please refer to for important information on our regulatory position F/07.17

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