Employment Status

Who is an employee?

Not all people who work for others are considered to be employees:

  • Some fall instead into the wider category of ‘workers’;
  • Some work for others but remain independent contractors;
  • Sometimes a worker may have two potential employers and it may not be clear whether he or she is employed by either one (or both) of them e.g. an agency worker.

It’s crucial for businesses to understand that different legal rights are attached to each category.

For example, only a person with the status of ’employee’ can claim unfair dismissal, maternity leave and redundancy rights.

Determining whether or not someone is an employee or not is not always a straightforward test and the wider circumstances need to be looked at in each case. We often speak to clients who believe individuals working for them are ‘zero hours’ or ‘casual’ workers, when for all intents and purposes, they are employees.

On the other hand, sometimes businesses have issued contracts of employment to individuals who are in fact workers, and this causes complications later down the line if the business then tries to defend a claim on the grounds that a person is not an employee.

The main features of an employer-employee relationship are as follows:

  1. Personal service – the individual provides his or her own work and skill in the performance of some service for the employer, and he/she does that in return for remuneration;
  2. Control – in performing that service, the individual is subject to a sufficient degree of control by the employer;
  3. Mutuality of obligation – there is an obligation on the individual to do work that is offered by the employer and equally there is an obligation on the employer to pay the individual (whether or not work is provided), and in some cases there is also an obligation to provide work;
  4. The other provisions of the contract are consistent with its being a contract of employment – e.g. the individual is subject to the company’s policies and procedures and receive other benefits such as paid sick leave or annual leave.

An individual will not be an ’employee’, but will be a ‘worker’ if items two and three are missing from the relationship, but he/she passes the personal service test (item one) and the other party to the contract, for whom he/she is doing the work, is not a client or customer of his profession or business undertaking.

If you have a query about the status of the individuals working for you, please contact a member of our employment law team and we would be happy to do an assessment of your workforce with you and ensure the appropriate documentation is in place.