Do you know the employment status of the people who work for you?

Do you know the employment status of the people who work for you?

By Lesley Smith

This is the first question you should consider at the outset of the relationship. Generally, people who work for you could be employees, workers or independent contractors.

Sometimes the nature of the relationship will be easy to identify. For example, someone works for you on a full-time basis (and no one else) would probably be your employee.

But in other cases, it will be more complicated.  Be careful that you do not agree to something that could cause problems later.

The nature of the relationship is important as different rights and obligations apply in each case.

Employee

What you are looking at is the reality of the relationship. A person may be an employee in employment law but have a different status for tax purposes.  Some of the key factors for someone being an employee are:

1. Personal service – does the person provide a service to you?
2. Mutuality of obligation – do you require someone to do the work and are they obliged to do it?
3. Control – do you control what they do?

A typical example of an employee would be a full time herdsman.

Worker

All employees are workers but not all workers are employees. Some of the factors for employees and workers are quite similar. Factors that could indicate someone is a Worker are If

1. they occasionally do work for a business
2. The business doesn’t have to offer them work and they don’t have to accept it (although that isn’t always the case with workers)
3. Their contract with the business uses terms like ‘casual’, ‘freelance’, ‘zero hours’, ‘as required’ or something similar. That would support them being workers rather than employees.

Self-employed

Someone who provides a service and is in business on their own account. A typical example would be someone you engage to do some contracting work for you on an as and when basis who uses their own machinery and who works for other people. If they

1. can decide what work they do and when, where, or how to do it; and
2. are not under your direct supervision when working, which supports self-employed status.

It’s a complex area so please take advice if you are unsure about anything. Get in touch with the BC team for any further more specific advice: reception@bowcockcuerden.co.uk

(This article is not intended to be comprehensive or to provide specific legal advice. It should not be relied upon in the absence of advice given in relation to particular circumstances.)