An individual will only have certain statutory rights such as a claim for unfair dismissal or a redundancy payment if he is able to show that he was in fact an ‘employee’. Therefore it is important to distinguish between an employee and somebody who is actually a self-employed independent contractor in a contract for services. Although legislation purports to define ‘employee’ it is actually left to the courts and tribunals to determine whether an individual was in fact an ‘employee’. Unfortunately the tests used by the courts to determine an individual’s status is vague and dependant on the circumstances of each case. Employers may have a variety of workers and workplace arrangements:
Employer and worker agree that the individual is not an employee but ‘self-employed’ paying his own tax but required to attend usual working hours etc?
Agency workers, are they the employee of the agency or the placement company? What about part-time, casual or home workers?
The courts have considered the above areas and whilst they will look to certain factors when determining whether an individual is an employee there is no exhaustive checklist and the circumstances of each case will need to be examined.
However, the courts have made it clear that they will look behind the label an employer has given to a worker, often in an attempt to circumvent statutory employment rights and to reduce their tax obligations.