17 January, 2019
It is common in the construction industry for a company to engage individuals to provide services on its behalf to an end client.
Whilst the company may want the client to view these individuals as part of their company, it is also common for the company to argue that the individuals are self-employed contractors, and definitely not employees or workers.
The employment status of an individual is an important issue for a business to determine as an individual's status determines the rights and obligations that they are entitled to.
Employees are entitled to a wide range of employment rights - a number of which only apply to 'employees' of a business. These include the right not to be unfairly dismissed, the right to a statutory redundancy payment and maternity, paternity and adoption leave.
Whilst workers are not entitled to these rights, they are entitled to certain employment rights such as the national minimum wage, paid annual leave and sick pay.
A self-employed person is more likely to be contracted to provide a service for a client as a self-employed contractor. Self-employed contractors do not have the same employment rights and responsibilities as employees or workers. For example, generally they do not have the right to holiday pay. They will however, still have protection for their health and safety on a client's premises and in some cases will be protected against discrimination.
Often classifying an individual as self-employed is not a problem until a disgruntled individual challenges their status. This is when problems arise for a business. The Tribunal's approach to determining employee status demonstrates that the labels attached to an individual are irrelevant. Instead, a Tribunal will look at what happens in practice, paying particular attention to mutuality of obligations, the level of control, the extent to which the individuals are integrated into the company and the economic reality of the situation.
Before engaging anyone in the construction sector it is important that you think carefully about how you are intending to engage them, particularly if you want to avoid creating an employee or worker relationship.
For more information contact Abigail Lynch in our Construction & Infrastructure department via email or phone on 0330 207 4469. Alternatively send any question through to Forbes Solicitors via our online Contact Form.