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Published by: Anna Bithrey

Are your contractors really contractors?

With the Court of Appeal hearing of the much publicised claims against Uber taking place in October, issues relating to employment status remain firmly in the spotlight. If your business engages self-employed contractors it is important that you have a grasp of the likely employment status of your staff and the implications of this.

The law recognises three categories of employment status. At one end of the spectrum are employees who work under employment contracts and are subject to a substantial degree of control by their employer. Employees are entitled to the full extent of employment law protections.  At the other end of the spectrum are the truly self-employed, in business of their own account and  broadly not protected by any employment laws.  Somewhere in the middle lies a third category: the worker. Not quite an employee but not genuinely self-employed either.  A worker is entitled to some limited employment rights including paid holiday and the national minimum wage.

Recent cases have demonstrated that the manner in which the parties categorise their relationship is increasingly irrelevant and that when determining employment status, tribunals will be concerned to understand the reality of the situation in practice. 

Whilst a range of factors are relevant to the employment status of individuals, many recent cases focus on personal service.  If an individual is obliged to provide services personally, a finding that the individual is a worker is more likely than not.

This was evident in the recent case of Smith v Pimlico Plumbers.   Mr Smith was engaged as a self-employed contractor but brought various claims in the employment tribunal based on him having status as an employee or a worker when the relationship was terminated.

The Supreme Court found that Mr Smith was a worker and was prepared to interpret the concept of personal service broadly.  Although the tribunal had made a finding of fact that Mr Smith could, and did, as a matter of practice substitute work to other Pimlico engineers, this was not enough to prevent Mr Smith having worker status. The Supreme Court noted that despite the limited right of substitution, personal service remained the dominant feature of the contract. 

Where a business is engaging contractors in circumstances where they are required to provide service personally, careful thought should be given as to whether the arrangements are sustainable moving forward.

In October and November 2018, Taylor Walton will be running a series of free seminars which will cover issues relating to employment status.  To book your place please contact marketing@taylorwalton.co.uk or call us on 01582 390568.

Should you have any questions on the topic of contractors then please feel free to contact Nicola Smyrl (nicola.smyrl@taylorwalton.co.uk) or Anna Bithrey (anna.bithrey@taylorwalton.co.uk). Alternatively, you can call the Employment team on 01582 731161.