Tolley's Managing Fixed-Term & Part-Time Workers

Lynda Macdonald

• Publisher: Routledge
• Year: 2009
• ISBN:
  9781136355097
• Edition: 2
• Topic: Business
• Subtopic: Business General
• Index: Business

Tolley's Managing Fixed-Term and Part-Time Workers is an essential tool for HR directors and managers, and their advisers.This timely handbook contains comprehensive coverage of the legal and practical implications of the new Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 and the EC Directive on Fixed-Term Work. With almost a quarter of the total UK working population engaged on part-time contracts, there has never been a greater need for employers to understand the latest rights and duties owed to those who work on a part-time, intermittent or job-share basis.This invaluable resource will show you how to deal fairly with agency temps, contractors, freelancers, casual workers, seasonal workers, students working during vacations, part-time employees and temporary workers engaged to cover short-term absence. Combining coverage of the legal background with practical advice on how to ensure your policies and procedures comply with the law, this handbook will enable you to:
- understand the laws that impact upon successive fixed-term contracts
- treat part-time staff fairly and avoid claims of unlawful discrimination from women who form the majority of the UK's part-time workforce
- draft your own documents using key sample documents – letters of employment, contract clauses and employment policies
- save time by giving you access to comprehensive legal and tactical information in one unique handbook, featuring questions and answers, checklists and case studies for ease of use
- ensure you are complying with the laws governing equality of treatment for fixed-term and part-time workersThis accessible guide explains the latest legislation and case law and offers an array of practical tips and tools to help ensure fairness of treatment for fixed-term and part-time employees.

1 Employment Status and Statutory Rights

Introduction

[1.1]

Many statutory employment rights are available only to employees, ie those engaged under a contract of employment (sometimes known as a ‘contract of service’). By contrast, individuals engaged under a contract for services have limited statutory employment rights, although the trend in recent years has been for new legislation to cover all workers, whether employed directly or engaged indirectly.

A part-time, temporary or fixed-term worker may be employed under a contract of employment, or alternatively may be engaged under a contract for services. This chapter aims to explore the distinction between employees and workers, and the implications of this distinction.

A further potential hurdle for temporary and fixed-term workers is that certain statutory employment rights depend on a minimum period of service, for example the right to claim unfair dismissal (which is available only to employees and not other workers) requires a minimum qualifying period of service of one year. Continuity of service is dealt with fully in CHAPTER 6.

The Distinction Between Employees, Workers and the Self-Employed

[1.2]

There are no universal definitions of ‘employee’ or ‘worker’. Some help is at hand, however, by dint of section 230(1) of the Employment Rights Act 1996 which defines an ‘employee’ as ‘an individual who has entered into or works under a contract of employment’. Thus the existence of a contract of employment establishes the relationship of employer/employee between the parties.

By contrast, a contract for services implies the appointment of an independent contractor or someone working on a freelance basis. Such a person is usually referred to as a ‘worker’. Section 230(3) of the Employment Rights Act defines a ‘worker’ as:

‘An individual who has entered into or works under … a contract of employment or any other contract… whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual’.

Thus a worker is someone who provides their services personally to the organisation with whom they contract, even though they are not regarded as an employee. The definition means that a wide range of people (for example casual workers, freelance workers, agency staff and certain independent contractors) can be classed as workers, provided the other party to the contract is not their client or customer.

A third category outside the scope of the definitions of ‘employee’ and ‘worker’ is the self-employed entrepreneur whose relationship with the organisation for whom they work is that of client/service provider, ie the person is in business on their own account and the organisation for whom they provide their services is their client or customer. Although some self-employed people can be classed as ‘workers’ for the purposes of certain employment protection legislation, the genuinely self-employed entrepreneur cannot. Examples of self-employed individuals whose contracts are with clients as opposed to employers could be solicitors or barristers who represent their clients in legal proceedings, and joiners and electricians who personally perform skilled work for individual customers.

In Byrne Brothers (Formwork) Ltd v Baird IRLR 683, however, the EAT held that four carpenters who worked on assignments for a building contractor – purportedly on a self-employed basis – were ‘workers’. This was because they provided their carpentry services personally and did not run their own individual businesses, as the company contended.

There is one exception to the general principle that self-employed people in business on their own account are not covered by employment protection legislation. All the anti-discrimination laws avoid the distinction between ‘employee’ and ‘worker’ and instead refer to ‘employment’. ‘Employment’ is defined as employment ‘under a contract of service or of apprenticeship or a contract personally to execute any work or labour’. This definition is to be found in section 82(1) of the Sex Discrimination Act 1975, Section 1(6) of the Equal Pay Act 1970 and section 78(1) of the Race Relations Act 1976. Similar wording appears in section 68(1) of the Disability Discrimination Act 1995 and in Reg 2(3) of the Employment Equality (Religion or Belief) Regulations 2003 (SI 2003/1660) and Reg 2(3) of the Employment Equality (Sexual Orientation) Regulations 2003 (SI 2003/1661). Thus individuals who provide their services personally for a client or customer are protected against discrimination on a range of grounds, even though they cannot enjoy many other employment protection rights.

The Implications of the Distinction Between Employees and Workers

[1.3]

Case law over many years has made it apparent that the distinction between a contract of employment and a contract for services can be blurred, and furthermore that an individual’s employment status can be successfully challenged at an employment tribunal. Typically, an individual engaged on a contract for services (who is therefore not an employee) may challenge their status following termination of their contract, or some other dispute with the employing organisation. In that eventuality, an employment tribunal will not regard the label the employer has put on the contract as conclusive proof of the individual’s employment status, but will instead examine the actual working relationship between the employer and the worker with a view to judging whether, in reality, it was akin to an employment contract. Although the stated intention of the parties is a relevant factor, it is not the sole determinant of employment status, as it is only one factor amongst many others (see 1.30 below). Clearly, if it were otherwise, it would be too easy for unscrupulous employers to contract out of employment protection legislation and deny a wide range of workers their statutory rights. Essentially, the interpretation of who is an employee and who is a worker will depend on all the circumstances of the particular case, and is based on a long line of case law.

What is clear is that where the evidence is such that the working arrangements and working relationship between employer and worker are in fact typical of an employment contract, the tribunal will decide that the individual is in fact an employee, rather than someone engaged on a contract for services. The status of a self-employed worker or someone working through their own personal service company may also be challenged by the Inland Revenue or the Department of Social Security given the different consequences under tax and social security law (see CHAPTER 9 at 9.11).

The Importance of the Distinction

[1.4]

The key importance of the distinction between employees and workers is that employees enjoy the full range of statutory employment rights, whilst independent workers have considerably fewer employment protection rights. In particular, most of the provisions of the Employment Rights Act 1996, which include the right to claim unfair dismissal, the right to a statutory redundancy payment, maternity and paternity rights and the right to flexible working, are available only to employees and not other workers. This may be an important distinction to many employers and of course to many workers.

There are other reasons why the distinction between an employee and a worker is important:

• Employers must deduct income tax and national insurance contributions under the PAYE scheme for all their employees. A worker who is self-employed on the other hand can be paid a fee gross of income tax as they will have responsibility for their own taxation and national insurance contributions under Schedule D, which is generally regarded as more advantageous than the tax regime applicable to employees.
• Only employees are entitled to certain social security benefits, eg unemployment benefit.
• There are various implied duties imposed on employers in a contract of employment which do not necessarily apply to other workers. These include the duty of trust and confidence, the duty to provide a reasonably suitable working environment and the duty to afford employees the opportunity to obtain redress for any grievance they may have. Employees too have implied duties under a contract of employment, for example a duty to obey reasonable instructions and a duty of fidelity, obligations which are not imposed to the same extent on workers.

Possible Future Provisions

[1.5]

It is possible that the distinction between employees and workers engaged on other forms of contract will be removed in the future for the purpose of statutory employment rights. The Employment Relations Act 1999, s 23 introduced authority for the Secretary of State to make Regulations to extend existing employment rights to workers who are not engaged on contracts of employment. To date this provision has not been used, but if such Regulations are introduced in the future workers such as contract staff, homeworkers, agency temps, etc may become entitled to the full range of employment rights in the same way as employees. Such a step would have a major impact on many businesses. In the DTI’s Explanatory Notes to the Act (para 232), it is stated that the Government is committed to ensuring that:

‘all workers other than the genuinely self-employed enjoy the minimum standards of protection that the legislation is intended to provide, and that none are excluded simply because of technicalities relating to the type of contract or other arrangement under which they are engaged’.

Advantages and Disadvantages of Engaging Workers as Opposed to Employees

[1.6]

There are various reasons why an employer may wish to engage individuals on a contractor or self-employed basis, rather than engaging them on contracts of employment. These include the following situations where:

• the work is thought to be of an uncertain or limited duration;
• the work output involves seasonal or other peaks with periods of low demand at other times;
• the amount of work fluctuates such that no guarantee of a fixed pattern of days or hours can be given; the employer needs extra resources on an ad hoc or planned basis to cover periods of leave, such as annual holidays, long-term sickness absence, maternity leave and parental leave;
• the employer wants to be able to call on additional resources in order to cut down on overtime payments to employees;

The obvious advantage to the employer of engaging workers instead of employe...

Table of contents

• Cover
• Title Page
• Copyright
• Preface
• Contents
• Table of Cases
• Table of Statutes
• Table of Statutory Instruments
• 1. Employment Status and Statutory Rights
• 2. Contracts of Employment
• 3. Part-Time Workers
• 4. Fixed-Term Workers
• 5. Temporary Staff from Employment Agencies
• 6. Continuity of Employment
• 7. Casual Workers, Students and Seasonal Workers
• 8. Homeworkers
• 9. Self-Employed Workers and Contractors
• 10. Avoiding Sex Discrimination
• 11. Employees Moving to Part-Time Work
• Index