Contractors' Questions: Do contractors have employment rights?
Contractor’s Question: I’ve got a simple question which I’d love a simple answer to -- do contractors have employment rights?
Expert’s Answer: Unfortunately, there is no simple answer. But in a strict sense, self-employed contractors do not have the rights and protections afforded to employees and workers.
However, even if someone is described as being self-employed in their contract and pays tax as a self-employed person, they may in fact have ‘worker’ or, in some cases, ‘employee’ status.
Worker Status Vs Employee Status
Worker status is what the Supreme Court recently found Uber drivers to have. It comes with various entitlements including the right to statutory holiday and pay, minimum wage, whistleblowing protections and the right to not be discriminated against.
Employee status comes with the above rights, but also various others including (if eligibility criteria is met) protection from unfair dismissal; the right to a statutory redundancy payment and the right to statutory sick pay and maternity/paternity pay and leave.
Worker Status: explained
To gain worker status, someone must have entered into a contract, which can be in writing or not, under which they are required to provide work/services personally to someone who is not simply a client or customer of that person’s business or profession. What this means is that the worker must be required to provide the services themselves – i.e. they are not allowed to send a substitute and their relationship to the hirer must be closer than an arm’s length business arrangement.
The Supreme Court found in the Uber case that a key consideration in determining whether there is worker status is the relative bargaining powers of the individual and the hirer. If the hirer has the power to dictate the terms of the arrangement and the individual is dependent on that hirer for work, it is more likely that the individual will have worker status.
Employee Status: explained
Employee status has more extensive requirements than worker status. There are a multitude of tests for establishing it, found in various case law.
Like workers, employees must be required by a contract to provide personal service. The employer must have control over the employee’s provision of the services including, usually, when, where and how the services are provided and there must be ‘mutuality of obligation’ – which means there is a requirement for the employer to provide work to the employee and a requirement for the employee to do that work.
What both statuses share
Tests for both employee and worker status involve an assessment of all of the relevant circumstances, not just the terms of any written contract in place. Every factor needs to be weighed up in turn and every case turns on its own facts.
Please note, my answer relates only to people contracting in their individual capacity, as opposed to those trading through a limited company.
The expert was Mark Primrose, an associate in the employment team at London law firm Harbottle & Lewis LLP.