Contracts of Employment
Contracts of Employment don't just detail the terms of a contract but define the status of the individual and the rights and protections accorded to it. Currently, there are three levels of employment status, 1 Employees, who will have the full rights and protections provided by employee legislation also known as a 'contract of service', longer-term permanent work. 2 Workers, who will have some meaningful rights and protections, commonly found in the 'gig economy' and will depend on who has control. 3 Self-employed individuals, who will have very limited rights and protection mainly around H&S and against forms of discrimination, contractors, and consultants operating under a 'contract for service'.
The Labour government is introducing its 'New Deal for Working People' over the next few months, and this is likely to bring about the biggest change in employment legislation and workers' rights in the past 30 years, including changing to having just two levels of status, workers and self-employed, therefore employers will have to be very aware of the changes and their impact on their employment relationship and contracts.
We can help to ensure that you have the right contracts in place for the people working for the business.
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Employee
Employees are individuals who work under employment contracts, are generally taken on for the long term on several different work patterns, full-time, part-time, or zero-contract, and benefit from a full range of rights and protections under a "contract of service", particularly the mutuality of obligation, ie the business supplies the work and the employee will undertake the work. They will qualify for benefits the likes of social security, health insurance, pension, sick pay, annual leave a minimum of 20 days paid and 8 public holidays, maternity pay, and paternity pay. Many employers provide either enhanced mandatory benefits and or a range of additional benefits.
Worker
With the rise of the 'gig economy' and individuals working for an organisation in a more casual less structured way or who do not have a regular work pattern, but are required to carry out the work personally, eg UBER drivers, are not offered regular or guaranteed hours by the employer and they have very little obligation to make themselves available for work, but should do the work they have agreed to do will be regarded as workers.
Self-employed
The rules that define self-employment are detailed under the HMRC "Intermediaries Legislation" generally known as IR35 and it aims to determine the legitimacy of whether your contractor is truly self-employed or should be regarded as an employee for tax purposes. Recent legislation introduced to close tax loopholes in tax liability and it is your responsibility to get it right. Misclassifying contractors or failing to operate in compliance with IR35 can have severe financial consequences for the business. Contractors work under a 'contract for service'.
The key determinants of a self-employed contractor are the principle of 'who has control over the work', the right to substitute the individual to carry out the work, setting their own work processes and attendance times, and negotiating the rates of remuneration. They will not qualify for holidays or paid leave.
There is no mutuality of obligation the employer does not have to offer ongoing work nor does the self-employed contractor have to accept any work offered.