As an employer, understanding employment law and the rights of your workforce is critical to minimise the risk of any employment-related problems. To get the best out of your workforce, having a good working relationship with them is essential, and if they all feel that they will be fairly treated, irrespective of the circumstances, then this will go a long way to creating a harmonious and productive working environment.
So, when it comes to ‘employing’ a member of staff, what do you need to consider when it comes to their employment status? How does that affect their rights as an employee and your rights as an employer?
Three main employment categories
Now, before we go any further, it will be best to make clear the three principal employment categories that cover the majority of workers.
- A worker
- An employee
- A self-employed or freelance individual
The nature of your business and the role of the person you want to employ will dictate the nature of the terms of employment and employee status.
The following are three examples which would correspond to the above three categories:
- A worker would likely be someone who works on a factory production line
- A department manager would most likely have the status of an employee
- An individual who looks after the IT/computing side of a company but who is not present on a full-time basis but instead is ‘employed’ on an ‘as-and-when-needed’ basis
So, what are the differences in these positions when it comes to employment law? Let us look at them individually.
This position within a business is seen as the most ‘casual, in that while they are subject to many of the same employment regulations as ‘employees’. There is rarely a need for a contract of employment, even though within two months, you should provide the worker with written details of their duties and responsibilities, together with their entitlements.
Workers often take temporary employment positions. These jobs often dictated by seasonal demand, such as fruit pickers, which is an excellent example of the nature of ‘worker’ terms where an employer is concerned.
Unlike ‘employees’, workers are not guaranteed a minimum number of hours work, or even guaranteed any work for any specific day. This is very much the basis on which the ‘zero-hours contract’ was developed for workers.
Fruit pickers are guaranteed a minimum wage under standard government legislation. However, fruit pickers are usually paid a ‘piece rate’ – in other words, the more fruit you pick, the more you will earn.
This is excellent for those who understand that this is manually demanding work, but for those who struggle with physical work, the prospects are bleak.
While you are guaranteed a minimum wage, you will also be set an achievable target. If that target is not met, you will be paid the minimum wage for that day, but you are unlikely to be asked to come back.
A person is defined as ‘worker’ providing they are expected to turn up regularly and to work for defined hours, as per an ‘arrangement’. Workers are not allowed to subcontract their work.
In return, a worker is entitled to be paid the national minimum wage, while also being entitled to paid holiday leave and the provision of payslips detailing any deductions.
Workers are entitled to be treated under general employment law where such things as discrimination, health & safety, etc.
Employees should be given a contract of employment, though this can be either written or verbal. Besides, employees should be expected to work a minimum number of hours per week and should be entitled to paid holidays. They are not entitled to subcontract out their work, but unlike ‘workers’ they are subject to the standard rules and regulations concerning redundancy procedures and will be entitled to Statutory Redundancy Pay (SRP).
Employees are also entitled to Statutory Sick Pay (SSP) together with maternity leave and parental leave, both of which are paid.
Employees also have greater protection against unfair dismissal. They must provide written notice to leave their employ and must work out a standard period of notice that would be indicated in their contract of employment. Employees also have the right to request flexible working arrangements when returning from maternity leave.
Many of the above aspects of employment law are covered in our blog post.
Self-employed and freelance workers
With recent advancements in information technology (IT), there are many roles within a business which can be performed remotely. When this is added to situations in SMEs and start-ups where there is a need for particular skills, but on a more part-time, or as-and-when-needed basis, self-employed individuals become an attractive option.
There has been a new term introduced into the employment marketplace, and that is the ‘gig economy’. This term is often associated with those who work on a freelance basis. Where this type of employment is concerned, together with that of self-employed status, the principal criterion is that you are not their only source of income. Were that the case, they would become classed as a part-time employee and would have to be treated in the same way as a full-time employee.
Employing people who are self-employed or who are freelancers not only substantially reduces your wages bill each month, but you do not have to pay for sickness or maternity leave, pay them when they are on holiday, or have to pay their tax or NI contributions, etc.
Under normal circumstances, someone who works on a self-employed basis will present you with an invoice for their work.
For SMEs, the type of person who is ‘employed’ on a self-employed or freelance basis might bell be a bookkeeper, accountant, IT/computer specialist, office cleaner, etc.
If you are currently looking at your existing workforce or are considering options where there will be roles for additional employees but are unsure what their employment status should be or will be best for you, get in touch with one of our employment solicitors who will be glad to answer any questions you may have.
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