EMPLOYEE, WORKER OR SOMETHING ELSE? Understanding the categories


In law, there here are three main categories of working relationship: employee


"highest" status – wide range of rights and protection


worker


limited rights e.g. to pay and working time


self-employed few rights – can be paid gross


Which category or label applies is not purely a matter of choice and the courts will look beyond the contractual documentation to the reality of the relationship. You could find that an individual you thought was self- employed is actually a worker or employee.


Example You take on an individual to work in telesales up to 15


hours a week on a flexible basis:  sometimes you need her for 5 hours a week,


 sometimes more  you know that she has another job elsewhere you pay her by the hours worked: if she cannot work


 the hours you set, you do not pay her if she cannot work, you do not let her send someone


 else in her place you give her a contract entitled "Self-employed


 worker agreement" you pay her gross and do not deduct tax or NICs


The brief facts suggest that she is not self-employed, but is probably a worker. The consequences for your business would be that:  she is entitled to the NMW, paid holiday and other rights (possibly pension contributions if she earns


 above the relevant threshold) the business should be making PAYE deductions for her and could be fined for not doing so.


There are other common labels and working arrangements that can span the boundaries between the categories e.g. casual workers, zero-hours workers, agency workers and interns.


If you engage people in any of these categories, you need to be alive to:


 rights that attach only to particular categories e.g. agency worker rights


 "mislabelling" – a person you treat as self-employed may in fact be an employee or worker.


Interns


An intern is not a special case from a legal perspective. Anyone that you call an intern will be either a genuine volunteer working for no pay, or a worker or employee who is entitled to the national minimum wage.


There are serious consequences for a business that fails to pay the national minimum wage: it could be required to pay up to six years of backdated NMW, be liable for a criminal penalty, and be publicly "named and shamed".


An individual who is doing temporary, unpaid work- shadowing (or who is just receiving some expenses) can be a genuine intern with no rights to pay or holidays. However, an individual who is required to do work for your business will be a worker, and possibly an employee, and so could claim statutory pay and other rights.


Here are some steps your business can take to reduce the risk of "mislabelling" interns:


 avoid making payments that could be construed as wages. Payments to cover actual expenses should be clearly identified as such and ideally reimbursed against receipts


 do not offer perks that could be seen as pay or reward  ensure there is no obligation on the intern to do work – if they are required to work, they are entitled to NMW.


Wedlake Bell’s Key Knowledge Guide to Employment Law for New Businesses


3


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12