In the past, the distinction has been between an employee and a self-employed person. More recently a number of statutes and regulations have introduced the notion of the worker: the Working Time Regulations 1998, the National Minimum Wage Act 1998, the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000 and the Public Interest Disclosure Act 1998. The new statutory right to be accompanied at disciplinary and grievance hearings also applies to workers. A number of rights, however, are confined to employees.
The Government recognises that this is confusing and promises to consult on proposals to rationalise the coverage of all existing individual employment rights.
Although the definition of workers varies from statute to statute, there are three key qualifications: they must have entered into a contract with the person to whom they supply their services; they must supply personal services; and the relationship must not be one of a client or customer. Unfortunately, it is not always easy to distinguish such workers from employees or the self-employed.
The sort of problems that arise were well illustrated recently by the case of two bricklayers, Barlow and Nelson. For a period of 14 weeks they worked on a building site. They did not receive any holiday pay during this period. Subsequently each of them claimed holiday pay on the grounds that they were workers for the purposes of the Working Time Regulations 1998.
They had signed documentation which, among other things, made it clear that they did not have a right to holiday pay or sick pay, but were entitled to send a substitute or delegate at their absolute discretion to undertake the services to be provided. There were no set hours and the bricklayers were to use their own initiative to complete the services. They could even choose how and when to complete the work as long as the overall performance was satisfactory. They could also undertake work for other third parties.
This was described as a business relationship. It was acknowledged to be one of self-employment that did not give rise to a contract of employment. The bricklayers were in business on their own account and so were responsible for their own tax and national insurance, had to implement public liability insurance and make their own pension provision.
The Employment Appeal Tribunal decided that the document they had signed was simply a device created by the organisation to which they were supplying their services to avoid the application of the regulations. There was a contract between the parties and they provided work personally even though there was limited power to appoint substitutes. The tribunal didnt agree that the bricklayers were self-employed and promptly sent the case back to be heard by another tribunal.
Unfortunately, there is little case law yet on how to identify a worker. Even the tax position is not conclusive in another case, a group of self-employed carpenters paying tax under Schedule D were still found to be workers for the purposes of the Wages Act 1986.
The current statutory framework is unsatisfactory. For example, the new statutory disciplinary and grievance procedures will only apply to employees although the broader group of workers have the statutory right to be accompanied at disciplinary and grievance hearings. The position of agency workers has long been confused particularly where issues arise as to who employs the individual concerned the agency or the recipient of the individuals services?
A review of the problem of employment status would be welcome. The class of workers who are not employees but are not, on the other hand, carrying on a business, deserve to be better identified.
The legal analysis of the relationship will be critical. Otherwise, there may still be claims from individuals who believe that their status, even if not that of employee, deserves protection by the law.
janet.gaymer@haynet.com
Janet Gaymer is senior partner at Simmons & Simmons
