The current UK picture

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There has recently been a lot of media coverage regarding the flexible labour market in the UK such as the well-publicised Sports Direct case, UBER and self-employed workers and zero hours contracts.

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This has resulted in the government undertaking a review into how employment practices need to change in order to keep pace with modern business models; addressing questions on issues such as job security, wage levels and employees’ rights.

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The Business, Energy and Industrial Strategy Committee launched a separate inquiry into workers’ rights in October 2016, reflecting growing public concerns over the employment practices of “digital economy” companies, such as Deliveroo and Uber, and the use of zero hours contracts.

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The recommendations from these reviews could have a significant impact on the UK economy.

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The UK stats

• 4.7 million self-employed workers in the first quarter of 2016 (ONS)
• 1 million agency workers in the UK by 2020 (Resolution Foundation)
• Currently 910,000 zero hours employees (Resolution Foundation)

What types of employment are there in the UK?

An individual’s rights will depend on their employment status; specifically whether they are an Employee, a Worker or a Self-employed Contractor.

A Worker is engaged on contract for services; not a contract of employment. No contract exists when a Worker is not on assignment and assignments and contracts can usually be terminated at any time by any party and with no notice. There is no obligation for a worker to be offered work or for the Worker to accept work.

An Employee has a contract of employment and will have the same basic rights as a Worker, but will have additional employment rights and responsibilities that don’t apply to Workers who aren’t Employees.

Why do we need different types of employment?

Different types of employment offer businesses the following benefits:

• Coping with peaks and troughs in demand.
• Providing additional seasonal staff.
• Covering absences such as sickness and maternity.
• Bringing in specialist skills for special projects.
• Allowing a business to analyse whether there is a long term need for a position.

How do the rights of Workers, Employees and Self-employed Contractors differ?

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The rights below apply to both Employees and Workers:

• The right be provided with a safe place of work.
• Rest breaks and a maximum number of weekly working hours in line with the Working Time Directive.
• Protection from discrimination in the workplace.
• A minimum of 5.6 weeks’ paid annual leave per annum (pro rata).
• To be paid no less than the National Minimum Wage / National Living Wage.
• Statutory Sick Pay (subject to meeting qualifying criteria).
• Statutory maternity, paternity and adoption leave (subject to meeting qualifying criteria).
• Access to a pension scheme.

The rights below apply to Employees only and do not apply to individuals classed as Workers:

• Employment protection after 2 years’ service (protection from unfair dismissal).
• Access to formal disciplinary procedures.
• Entitled to raise formal grievances.
• Entitled to redundancy pay (subject to 2 years’ service as an employee).
• TUPE rights in the event of a TUPE situation.
• Free eye-tests for computer users.
• Entitled to and required to give notice to terminate employment.

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Self-employed Contractors are not entitled to any of the following statutory employment rights; statutory paid annual leave, statutory sick pay, statutory maternity leave, paternity leave, adoption leave and parental leave (including statutory pay); but they do have the right not to be discriminated against and the right to have a safe place of work.

Advice to Businesses

• Understand how an individual is engaged; are they an Employee, Worker or Self-employed Contractor?
• Ensure that you are aware of the different employment rights that each type of engagement brings and make sure that you’re fully compliant with the minimum legislative requirements.
• Don’t treat Workers and Self-employed Contractors exactly the same as your own employees as it might blur the employment relationship.
• If people are provided to you by an agency or contractor, make sure that you find out how they are engaged as this might affect how they are managed.