Employment Status Guidance: A matter of choice?

The area of employment status has been an ongoing issue for the last 20 years. The Government has just concluded consultation on this issue and published employment status guidance for employment rights.

The Government recognises that the employment status framework for rights works for the majority but that boundaries between the different statuses can be unclear for some individuals and employers.

However, the benefits of creating a new framework for employment status are currently outweighed by the potential disruption associated with legislative reform. Although such reform could help bring clarity in the long term, it might create cost and uncertainty for businesses in the short term, at a time where they are focusing on recovering from the pandemic.

The Government has issued new comprehensive guidance on both employment status and worker rights.

The guidance makes the point that employment status is not just a matter of what a contract says, it is determined by the reality of the working relationship between employer and individual, taking into account all the circumstances, including the purpose of employment legislation. The written contract is just one part of that assessment. Ultimately, it is a question of fact.

Although there are many different working relationships that individuals and businesses can agree to, the law reduces these into three main types of status for employment rights. The main types of employment status are:

• an employee - has the most rights and responsibilities;
• a worker – has fewer rights and obligations. The aim of worker status is to extend the coverage of certain employment rights to a wider group of individuals than just employees, protecting a larger number of individuals who are in dependent working relationships but are not employees; and
• a self-employed person - has the least protection but also tends to have fewer personal obligations and significant flexibility in their work and/or delivers a service to a customer or client as part of a business or professional undertaking.

This whole area is fraught with complications and difficulties and, ultimately, a great deal of potential exposure for any employer who doesn’t not operate the rules correctly.

Clients may not wish to hear it but getting their workers position sorted out now may avoid greater problems in the future.