The question of what constitutes a “worker” was addressed again in a recent Employment Appeal Tribunal case*.
What is the significance of the worker category?
Classification as a worker gives the individual more employment rights than being self employed.
Workers are protected against unlawful deductions from wages, by the Working time legislation which prescribes maximum weekly working time, daily and weekly rest requirements and have a right to paid holiday.
Businesses who hire staff on a self employed basis and don’t provide their staff with paid holidays run the risk of a claim from former or existing staff that their status is that of “worker” and they are entitled to paid holiday.
In this case the Claimant was a self-employed sub-contractor working almost exclusively for a company. There was no obligation on him to accept work when offered and no obligation on the company to offer him work. He claimed he was a “worker” and entitled to holiday pay. He had been working with the company for 16 years, they regularly offered him work and expected him to turn up and work during working hours. He wore the company’s work clothes and drove its vehicles.
The Employment Appeal Tribunal said there were three questions to ask in this situation:
- Was there a contract at all?
- Did the contract require the individual perform the services personally? If he was entitled to provide a substitute, that would be an important, but not decisive, factor.
- Was he was carrying on a business and was the Company a client of that business. This involved considering the level of control the Company had over the individual, whether he was integrated into the business and whether he marketed his services to others.
In this case they concluded that there was a contract, that it was for the services to be provided personally and that the Company was not a client of a business carried out by the Claimant, they decided that he was a worker.
When engaging staff on a self employed basis, companies should consider carefully their requirements for the staff and their real status. Failing to correctly identify a worker risks a future claim for arrears of holiday pay.
If you believe a self employed contractor will not count as a worker, ensure there is a professionally drafted contract defining the relationship showing that the status of the contractor and demonstrating that they do not have “worker” status.
*Plastering Contractors Stanmore v Holden