the contract of employment

Question 1

What type of contract do employees, workers and independent contractors work under?

Answer 1

• Employees and workers: work under a contract of employment (contract of service).
• Independent Contractors: contract for services

Question 2

Is the question of whether a worker is an employee, worker or an independent contractor one of law or fact?

Answer 2

Fact

Question 3

How does a court determine whether someone is an employee, worker or independent contractor?

Answer 3

1. the contract
2. financial risk and capital outlay
3. delegation or personal performance
4. control

Question 4

What are the main differences in the legal obligations of an employer to an employee, worker, and an independent contractor?

Answer 4

1. Employees
   An employee’s contract of service entitles them to a full range of existing employment rights including sick and holiday pay. Employer deducts NI and tax.
2. Workers
   Contract of service. Cannot claim sick pay but they can claim holiday pay.
3. Independent Contractors
   Contract for service. Cannot claim sick pay, they pay their own NI contributions and tax.

Question 5

Do employment contracts have to be in writing?

Answer 5

No, they do not need to be in writing.

Question 6

What does s 1 ERA 1996 require an employer to do?

Answer 6

Provide the employee (or worker) with a s 1 statement.

Question 7

What must be included in the s 1 statement?

Answer 7

It contains key terms (i.e., it is not exhaustive).

E.g., parties’ names and addresses, the date the employee started work, the date on which the employee’s continuous employment began. a note of any disciplinary or grievance procedure, full particulars of pay entitlement, hours of work, holiday entitlement and pay, any sick leave and pay entitlement, any pension rights, length of notice to be given (by both parties), job title and brief description, if it is fixed term or continuous, place of work of the employee and any collective agreement directly affecting the job.

Question 8

Brian, a building labourer, has worked for BB Builders for the past six years. When Brian took the job, he was told that he was self-employed and that he had to look after his own tax and national insurance.

Brian’s work is not skilled, and he uses the tools provided by BB Builders. On three occasions when Brian could not work personally his brother did the day’s work instead. This situation was accepted, reluctantly, by the foreman.

About half of the money which Brian receives from BB Builders is by way of a bonus. The other half is paid at a flat hourly rate.

What factors would a court consider in deciding if Brian is an employee or independent contractor?

Answer 8

A matter of fact, to be decided considering all the evidence.

The label, self-employed, is not conclusive evidence particularly as Brian is unskilled.

He pays his own tax and NI (indicates self-employed).

Does not require personal service as his brother has carried out work on his behalf (indicates he is self-employed).

BB Brothers provide the tools and hourly payment (indicates he is an employee).

Is Brian a person in business on his own account? If not, indicates he is an employee