The importance of employment status, by Liz MacDonald

The importance of employment status, by Liz MacDonald

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The importance of employment status is more crucial than ever following the recent decision in Pimlico Plumbers and Charlie Mullins v Gary Smith. Employers need to ensure that the people working for them are categorised correctly. This case centred on whether the plumber was a worker or a self-employed person.

Gary Smith wanted to reduce his working hours following a heart attack. Pimlico Plumbers refused the request and took away the van they had supplied. Gary Smith claimed he was dismissed. The Court held that even though he had supplied some of his own equipment and paid his own tax he was, in fact, a worker and so enjoyed the benefits connected with that status including, but not limited to entitlement to paid holiday and the national minimum wage. This was because he was not allowed to work for any other companies.

The test of employment status to establish whether a person is a worker, an employee or self-employed is threefold:-

  1. Personal service – the person undertakes the work themselves. If a person can substitute or subcontract the obligation they are more likely than not to be self-employed.
  1. Mutuality of Obligation – both the employee and employer are under obligations to one another i.e. the employee carries out the work and the employer provides the work.
  1. Control – the extent to which the individual is controlled in the manner in which they undertake their tasks. This includes whether they are able to work for other people, whether they are paid for holiday or sick pay, whether they receive a fixed amount etc. This list is not exhaustive.

If an individual is found to be an employee they enjoy greater rights than someone who is a worker or a self-employed person. Workers do however get some rights but not to the same extent as employees. The starting point will be the wording of an individuals’ contract of employment.

If you are an employer who needs assistance with employment contracts, please contact either Robin Humphreys or Liz MacDonald on 01905 731 731.