Tim O’Callaghan is a partner in Druces LLP, specialising in advice to the fashion and luxury goods business. In this month’s column, he writes about workplace rights.
As the best of this year’s contour graduates are being courted by the lingerie world, a timely reminder of the various distinctions that apply in the context of workplace rights can be helpful.
The recent changes in employment law not only makes employing people something of a minefield for businesses, it even has many lawyers pining for the old certainties of the law of ‘master and servant’ – as employment law was known until surprisingly recently.
For businesses in the intimate apparel sector, the question of whether an assistant is employee, worker, intern or freelancer is just as important as it is for other businesses and, because of the popularity of interns and freelancers in the sector; can be more difficult to determine.
But what does it matter which category someone who provides services to you and whom you pay falls into? The reason is this: the rights that an employee enjoys against its employer are entirely determined by the category they fall into. Misjudge an employee’s status, and you could find yourself with a frustrating and expensive claim on your hands.
Another feature of this area of law that some businesses find surprising, is that in determining what category an individual falls into, more emphasis is placed on what actually happens ‘on the ground’ than on what any contract between the company and the individual states. By way of example; a three-day-a -week marketing assistant’s contract may describe her as a self-employed consultant, liable for her own taxes.
The contract may also explicitly state that she is not an employee. However, if she is actually under the control of the employer, integrated into the business and expected to be present at certain hours she is likely to be found, as a matter of law, to be an employee. Here, I’ll explain the legal definition of employees, workers and interns:
The pinnacle of protected categories; employees enjoy a cornucopia of statutory rights, including:
1. the right to claim unfair dismissal;
2. the right to a redundancy payment;
3. the right to a minimum notice period;
4. the right to statutory sick pay;
5. the right to maternity, paternity, adoption, parental leave and pay.
Who are employees?
1. an individual who has entered into works under a contract of employment;
2. the contract doesn’t have to be in writing but there needs to be an agreement for the employee to perform a personal service in return for a wage;
3. there needs to be control of the employee by the employer.
Workers enjoy far less statutory protection than employees, but they are entitled to some rights including:
1. to be paid the national minimum wage;
2. paid holiday;
3. health and safety rights.
Who are workers?
Broadly speaking, anyone engaged on a contract for services who is not an employee.
The term ‘intern’ has developed independently of the law relating to employees and workers. Interns can therefore enjoy the rights of either employee or worker, depending on the facts of their relationship with their employer.
If an intern is just on a work shadowing placement, rather than actually performing work, they will be not achieve the status of worker and will not be entitled to the National Minimum Wage. There is also a specific exemption from the National Minimum Wage for interns who are on work experience placements of less than one year and who are undertaking the internship as part of a UK based higher education course.
Freelancers will usually be a category of worker and will enjoy the same statutory rights as workers. They will typically be responsible for their own tax and national insurance.
Again, beware of ‘employment creep’ where all concerned start out with the expectation that a contract will be taken at face value and will be for the services of a self employed freelancer; but the reality of the relationship is something different – closer to employer and employee.
Contracts with staff are indispensible for many reasons, but in determining a worker’s status they can often be less important than the facts of the relationship.