What is Employment Status?

By Laura Wellbelove


The most important question to ask when you commence employment is, ‘what

employment protections are available to me?’. The primary consideration for determining this is each individual’s ‘employment status’. It seems simple, right? An individual starts a new job and pops this question to their manager, who will give them the answer. On the contrary, determining an individual’s employment status is far from simple.

Let me break this down for you. Employment status is divided into three main categories. An individual could be:

1. An ‘employee’,

2. Self-employed, or

3. A ‘worker’


Let’s start with the simplest before going on to the more confusing ones.


Employee


An employee is defined under s.230(1) of the Employment Rights Act (‘ERA’) 1996 as, ‘an individual who has entered into or works under a contract of employment’.


A ‘contract of employment’ is any contract of service, which could be made orally or in writing, and it could be express or implied. This is relatively straight-forward. To illustrate, I will use an example. While I was an undergraduate student at Oxford, I had a part-time job at John Lewis. Before I commenced my employment there, I was sent an express, written contract. In this contract, there were details about my salary, working hours, holiday pay, and so on – all of which were essential to be included, pursuant to s.1 ERA. All these elements together form a ‘contract of employment’, which is an absolute necessity to label

someone as an ‘employee’.


Self-employed


Although there are around five million self-employed individuals in the UK (before Covid-19), this is the only employment status, not codified in legislation (there is no definition for ‘self-employment’).


The majority of people have a slight understanding as to who self-employed people are, and what they do – it could be the local plumber or electrician who comes round every so often to sort out any household problems. But if someone asked you to try and define this category of people, what exactly would you say? Perhaps, ‘the people who complete household labour jobs’, or ‘those who work for themselves to make money’. Everyone shares some common perception of a ‘self-employed person’ but without a legal definition,

there is a lack of clarity within this area – particularly in differentiating between workers and self-employed people.


Workers


I have certainly saved the best category till last. This ‘employment status’, has led to complete uproar within employment law, and is the very reason why Matthew Taylor produced his Taylor Review Report in July 2017.


The ERA, in its current form, attempts to define a ‘worker’, but in my opinion, this definition makes no real difference at all. You will read it and think, ‘well what on earth does this mean?’. S.230(3) of the ERA defines a ‘worker’ as, ‘an individual who works under a contract of employment, or any other contract’. So, to break it down – a ‘worker’ could be ANYONE. Workers are generally perceived to be those who have the flexibility of choosing to work when and where they want to, which gives them more control over their jobs – where, does the definition in the ERA cover these aspects? It simply does not.


We have seen above that an ‘employee’ will work under a ‘contract of employment’, but this definition suggests that even a ‘worker’ can work under the same contract (or any other contract)! To me, this definition does not even remotely categorise who a ‘worker’ is; and don’t even get me started about it not reflecting the emerging business models of ‘casual workers’. In recent years, new working business models have developed from the ‘worker’ status – atypical work, casual workers, independent contractors, and so on. In a nutshell, all of these are broadly the same, but the current definition does not reflect any of them.


These are the main issues surrounding ‘employment status’. The Government needs to change the law to clarify the different definitions and ensure it relates to the current working climate.


Potential changes to the definitions of ‘employment status’


Matthew Taylor suggests replacing ‘worker’ with ‘dependent contractor’, and giving more weightage to the ‘control element’ of the test. In my opinion, changing the name of a ‘worker’ will not make much of a difference; it is the definition, which needs a lot of rework. The Good Work Plan, written in 2018, builds off the Taylor Review to suggest changes to the various definitons; now, we are to wait and see how and when the Government will implement any of its suggestions.


This is certainly a ‘watch this space’ topic for the future of Employment Law within the UK so watch this space for any updates!

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