What's Your Status?

It may seem like an obvious statement, but only employees have employment rights. In particular, only employees are protected against unfair dismissal. So it is important to know whether or not a person is an employee and what rights non-employees may have. The best means of finding out whether someone is an employee is whether they have a contract of employment. As I mentioned last week, contracts of employment can be written or verbal, or sometimes a bit of both.

Non-employed workers do have some employment-style rights, such as the right to the statutory minimum wage (currently £4.85 for those aged 22 and over) and at least four weeks’ holiday, including bank holidays. As a general rule, a worker is someone who personally agrees to work for someone else, unless he or she is genuinely self-employed.

Because casual or ‘self-employed’ workers have fewer employment rights, companies sometimes prefer to use these people rather than taking on employees. In many situations this is perfectly legitimate. However, sometimes companies will refer to their workers as being “casual” or “self-employed” when in fact they are employees, with the full rights that this entails.

So, how can you tell if someone is really a casual worker? A true casual worker is likely to be somebody who is offered some work but is not obliged or required to do it; it is entirely up to him or her. If they decide to accept the work they will be paid once it is completed and then they get to go home. The company may call the casual worker if more work is available, but he is not under any contractual obligation to offer the work to that person. If work is offered, the casual is again not under any obligation to actually do it.

For example, in a case called Carmichael v National Power Plc the House of Lords decided that guides who were engaged to show people around Blyth Power Station on a “casual as required basis” were not employees. National Power did not have to offer the guides any work and, if it did, they were not under contractual obligation to do it. The legal phrase for this reciprocal relationship is “mutuality of obligation”, and without it, there is no employment contract.

What does this mean in practice for employers? If somebody works in your business week-in week-out on a full time or part time basis and has done so for more than a few months, he or she is likely to be an employee, even if you call him a “casual”.

If you want to engage a casual to work for a short time, make sure that you record in writing that this is a one-off piece of work and that once it is finished you are under no obligation to offer them any more work. Do not make verbal promises contradicting what you have put in writing.

What does this mean for casuals? The answer is, it depends. If you have an arrangement with an organisation under which you do bits of work from time to time but you enjoy the flexibility of turning work down, you are not an employee. But you are a worker and entitled to workers’ rights.

If you work on a regular basis week-in week-out, you may want to ask the company whether you are really an employee and not a casual, particularly if you are denied benefits that employees working alongside you are getting. Whether you are brave enough to rock the boat probably depends on how aggrieved you feel. Taking advice on the risks from the Citizens Advice Bureau if you do not want to pay legal fees is probably a good idea. Taking employment advice from a mate in the pub is normally a bad idea.

Finally, what about people who are self-employed? A person who is truly self-employed does not have a contract of employment but works under a contract for services. The plumber who has his own business and mends your washing machine one morning and someone else’s in the afternoon is self-employed. But what about the person who is called self-employed but only works for one company? For example, what about a driver who delivers washing machines but only for one company. Is he an employee of that company? The answer is, it depends on the wording of the contract that he has with that company. If there is no written contract, an employment tribunal is likely to conclude that he is an employee. However, if there is a written contract which makes it clear that the driver is not considered to be an employee, he will be self-employed. One way to make it clear that the driver is not considered to be an employee would be to include a provision that if the driver does not want to work, he is responsible for providing another driver.

The lesson from all of this is that employers who want to sail close to the wind should take legal advice first. People who have the label of casual or self-employed, but feel that really they are employees, should check out whether they are being deprived of rights and benefits that they are entitled to.

Published 27/09/2006.