Over the past few years, employee status has been closely examined in the employment tribunals. In addition to this, the way individuals want to work has also changed, as those individuals who are genuinely self-employed has increased significantly.

For employers, it is essential that you know the difference between employees and workers. This is because of the rights that the different categories attract. Also, labelling the relationship correct from the start will help in any potential future disputes between you and the individual that may occur.

It is important to note however that just because someone has an employment contract and is labelled an employee, this does not mean they are an employee.  The reality of the situation must always be considered in conjunction with any documentation.

So, what difference does it make?

For example, employees and workers are entitled to holiday pay, National Minimum Wage, an itemised payslip and both are afforded protection from discrimination. However, workers are not entitled to statutory maternity pay, statutory paternity pay and statutory sick pay.

Most importantly, workers are not entitled to claim unfair dismissal, this a claim that only employees can make.

Therefore, it can be a very costly mistake for employers who wrongly believe that an individual is a worker, and refuse them employee rights. This could lead to a claim for unfair dismissal, constructive dismissal, wrongful dismissal and a possible discrimination claim. Ultimately leading to a significant award from the employment tribunal to the individual should they pursue the matter.

There is also a risk of reputational damage associated with these kinds of claims / areas of dispute, which can also cost employers.

Getting the relationship correct from outset is the best way to mitigate this risk. If you would like to discuss this further, our team offer a my HR health check where the status of those engaged by you can be assessed and advice given on any potential risk areas and ways to identify the status going forwards.

Leah Vaghela, Solicitor