Employment law - keeping a tight rein

By Michael McNally Mon 9 Mar, 2015

If you run an equestrian facility, the chances are that you have a number of members of staff. Even if you only have your own stables at home, you may well have one or more people in on a regular basis to help you out. Whichever it is, it is vital that you clarify what their employment status is. Employment tribunals are full of cases where the employer failed to appreciate what the employment status was of a staff member, leading to the employer taking unlawful action and facing an employment claim.

A key problem for employers is that it is often very difficult to understand what a staff member’s status is. There are four types of status:

Dealing with these in reverse order, a volunteer is somebody who works entirely voluntarily without pay (except for the refund of expenses) and who has no contractual rights at all. Such as person is a rare beast and, unless it is very clear that someone is a pure volunteer, you should not assume that any staff member is a volunteer. Volunteers have no employment rights whatever – not even discrimination rights under the Equality Act 2010.

The greatest area of confusion is in distinguishing whether a staff member is an employee, a worker or genuinely self-employed. I have often seen examples of owners of equestrian premises or stables describing, for example, a groom as self-employed, when she plainly is not. The sort of people who are self employed are farriers, vets and builders. When you ask a vet to come out to attend to your horse, the veterinary practice may send out one of a number of different vets – you might prefer to have one particular vet, but you cannot insist on it. The same would apply if you called out a farrier from the farriery practice. The essential point here is that there is no obligation on the practice to provide a particular member of staff. The genuinely self-employed have no employment rights (apart from discrimination rights).

The key question as to employment status therefore is whether the person is required to provide personal service – and at times prescribed by you. If you engage a groom and she has to come to your premises to provide work herself – and cannot send a substitute in her place – and has to turn up at times you have agreed with her, then it is extremely unlikely that she is self-employed and she is very likely to be an employee. This is important because employees have full employment rights including, most importantly, the right not to be unfairly dismissed.

The current position is that someone has to be employed for two years before they acquire unfair dismissal rights (except in certain circumstances, such as where they are dismissed for complaining about health and safety or whistleblowing, in which case they have unfair dismissal rights from day one). Once someone has unfair dismissal rights, you cannot dismiss them or take other employment action against them without going through proper procedures, involving meetings and consultations. Many employers lose unfair dismissal claims not because they were not entitled to take disciplinary action against an employee or to dismiss them, but because they didn’t follow the right procedures before doing so.

Confusingly, it is sometimes difficult to distinguish between an employee and a worker. Unfortunately, there is no simple and straightforward way of distinguishing between the two. Generally, a worker is someone who is required to provide personal service (in other words they cannot send a substitute in their place) but nonetheless lacks the essential quality of employment status – for example, because that person has flexibility about when she works and can turn up for work when she wants and at times which suit her. Workers have similar employment rights as employees but, critically, do not have unfair dismissal rights.

The critical thing to be aware of is the need to make a decision when you take someone on as to what their employment status is going to be and then put that in writing. If someone is to be an employee, they should have a contract of employment; equally, if that person is to be a worker only, then they should be given a contract which says that – and the same if someone is to be self-employed only. If you do this, there is a much greater chance of an employment tribunal accepting that you have clearly thought about it and come to a sensible conclusion which an employment tribunal will not interfere with.

In my experience, where the business fails to apply their mind to the employment status of their staff and has not put anything in writing, the employment tribunal is much more likely to decide that someone considered by the employer to be self-employed is in fact an employee or worker, resulting in a successful employment claim. You will also face the risk of HMRC coming after you for tax and national insurance if you have been treating someone as self-employed and consequently not paying tax and national insurance when the employment tribunal and HMRC don’t agree!

If you would like more information about topics discussed above, please contact Michael McNally 01732 375396 or email m.mcnally@warners.law

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