In response to calls for clarity on the issue of employment status, the Department for Business, Energy & Industrial Strategy has issued new guidance on employment status for workers and businesses.
The guidance brings together employment status case law into a ‘one stop shop’ for businesses and individuals. In an accompanying press report, the Government states that the guidance “will make it easier for individuals to work out their own status while ensuring that the employment status system remains flexible and continues to adapt to modern working practices”.
An individual’s employment status determines and defines the employment rights protections they are entitled to at work. These include pay, leave, redundancy, dismissal, working conditions, notice, flexible working and other rights and protections that dictate the responsibilities that an employer owes to that worker.
The detailed guidance complements the existing Gov.uk Employment status guidance, and provides practical advice and examples for HR professionals on:
- Employment status and how it determines the employment rights individuals are entitled to and for which employers are responsible
- Factors determining an individual’s employment status
- Special circumstances and recent developments in the labour market
- How employment status should be determined for different sectors
- Where to go for further information
There are also two additional pieces of guidance for:
- Individuals, to help them understand their employment status so that they know their rights, can have informed discussions with their employer about them, and can take steps to claim them and have them enforced where necessary
- Employers or engagers, to help them understand individuals’ employment status so they comply with the law, helping ensure individuals receive the rights they are entitled to, and to avoid unnecessary disputes and associated costs
The publication also includes specific advice for micro businesses, start-ups and SMEs that may have less capacity and legal expertise to understand the law. By reducing the risk of companies being fined by rules they have broken unknowingly, the new guidance aims to “inject confidence into businesses to support their staff and stimulate economic growth” and “help to curb unscrupulous employers from attempting to exploit the system in order to save on employment costs.”
Notably, the guidance also clarifies the rights that gig economy workers are entitled to, following the landmark Supreme Court judgement in Uber BV v Aslam 2021, which held that individuals in the gig economy can qualify as ‘workers’, meaning they are entitled to core employment protections. To the disappointment of many however, the new guidance does not abolish what is known as ‘zero rights employment’ or ‘IR35 employment’, which remains a complex and highly disputed area of law.
Questions have also been raised around the fact that the guidance maintains a separate system for determining employment status for tax, which effectively rules out aligning tax status with employment status for the foreseeable future.
Whilst the guidance provides a helpful tool for those on both sides of the ‘employment’ relationship, employment status issues remain a complex topic where getting it wrong can have significant and costly ramifications.
For expert advice on employment status matters, please contact a member of our Employment team who will be happy to assist.
For more information, please see the govt’s guidance in full.