With jobs becoming more fluid and less defined by the traditional 9-5 schedule, the growing popularity of working from home, hot-desking and working remotely means that many jobs can be completed outside of office environments.
This gig economy – a work environment based around freelance or part-time work – has been hailed as an exciting solution which allows self-motivated entrepreneurs to take work on in a way that fits their schedule; for parents or anyone else with a demanding routine, the gig economy takes away the rigid structure of traditional work.
However, removing the structure also means losing some of the safeguards that come with it, including paid sick leave and paid holiday. The gig economy has its benefits and its caveats, but the nature of the industry which has grown around it means there is room for interpretation around employment definitions.
International corporations like Deliveroo and Uber have been key players in the gig economy, hiring workers, but also not calling them workers. This has led to the use of numerous terms, like self-employed, sub-contractor, and independent contractor to describe the working relationship at play, and this in turn has pushed the boundaries of what constitutes employment.
However, Uber’s London division was recently taken to an employment tribunal which saw Uber drivers recognised as direct employees of the company, instead of independent sub-contractors.
This landmark tribunal means that Uber (and perhaps other companies operating in similar ways) must recognise the statutory rights which apply to their workers, including the Employment Rights Act and the National Minimum Wage Act.
As such, this case could have huge ramifications across the gig economy, affecting the ways in which companies operate and the way fluid work arrangements work.
To help you to understand the differences in the terms used, we’ve compiled this guide to explain different employment statuses
A person is an employee if they work under an employment contract, and are accorded employment rights.
Contracts of employment dictate the terms under which a person is employed, and will refer to the parties using the terms ‘employer’ and ‘employee’.
Employees are entitled to a range of statutory protections enshrined in law; sick pay, redundancy pay, parental leave, the right to request flexible working, time off for emergencies and minimum notice periods are all protected by statute, and must be provided by an employer.
Employees are expected to work a standard number of hours per week, completing tasks set by a manager within timeframes and using tools or equipment provided by the business.
A person is self-employed if they run their own business, take responsibility for its success or failure, and determine their own working arrangements, such as hours of work, fixed prices and the timescales of their own projects.
The legal rights and responsibilities of self-employed workers are different from those of employees and workers, and may vary due to the fact that those rights and obligations are set out in the terms of the contract a self-employed person holds with their client. These contracts are called ‘contracts for services’ instead of contracts of employment.
Self-employed people do not receive the same employment rights as employees or workers; there is no guarantee of minimum wage, nor paid sick leave or paid holiday.
A freelance worker is considered to be a casual or irregular worker, as the nature of the work they undertake is occasional. The nature of relationship means that work is irregular, with no obligation for the company to provide work and no obligation for the freelancer to undertake work.
Casual work contracts do not need to be written, and may use terms like ‘casual’, ‘freelance’, or ‘zero-hours’.
Legal rights for workers include the provision of the National Minimum Wage and may include statutory sick pay and parental pay, but beyond this there is no statutory redundancy pay, protection against unfair dismissal, and no guarantee of flexible working provisions.
A contractor can either be self-employed (if they tend for work themselves), a worker if they work for a client, or an employee if they are employed by an agency. As such, they are legally treated as a worker as above.
As such, the rights of contractors will vary.
There is a special provision for contractors and sub-contractors working in the construction industry called the Construction Industry Scheme, which is used to track National Insurance and tax payments. Contractors must register for the scheme.
It’s easy to see why employment status is such an important issue, not just for Uber and its workers, but for businesses and employees all across the country.
Ultimately, the legal classification of a worker and the rights to which they are eligible can affect the bottom line of a business; provision for additional expenses, such as statutory sick pay or parental pay, can bite into a business’ profits. Deciding on which type of arrangement best suits the need of your business and best matches up to your financial situation will vary depending on the unique requirements of each business.
For full and official guidance on employment status, refer to the UK government’s online portal. which has guides explaining in further detail the nuances between different employment statuses. You can access their resources here.