Top tips on deciding employment status

Written by SSE fellow and HR for charities and social enterprise specialist, Sonia Wilson.

Many small social enterprises/charities ask me “Is it ok for me to be treating someone as self-employed or should they be an employee?”  The short answer is that it depends on the individual circumstances.  This blog looks at why it is important to understand employee, worker and self-employed status.

You will probably be working with people in different ways to deliver the aims of your social enterprise, including:

• Self-employed freelancer/contractor – you will have agreed a rate for a specific task/project. You will expect them to invoice you and take care of their own tax/NI.
• Volunteers –will provide their support for no payment. https://www.gov.uk/volunteering/pay-and-expenses
• Casual or sessional workers – these are people who provide temporary support for your ad hoc tasks or activities.
• Employees –will provide support on a fixed-term or open-ended basis. You will want to control closely the way in which the role is carried out.

Painting the picture

Determining employment status is not a matter of completing a checklist of questions and getting a definitive answer.  It is more like painting a picture of the working relationship and standing back to see what emerges!  The key areas to consider (and these are points mulled over by employment lawyers) are:

• How much control you wish to have over when, how and what the individual does for you
• How strong will the mutual obligation be for you to offer work and the individual to accept this work and carry it out personally
• Will the individual be able to send a substitute?
• Will the individual provide their own equipment?
• What is the proposed length of time of the working relationship?
• The degree of financial risk for the person working for you.
• Is the person able to work for some other organisation(s)?
• How integrated is the person into your social enterprise, e.g. attending meetings, wearing your organisation’s uniform?

The more control you wish to have and the stronger the mutual obligation, then the more likely that the individual is an employee.

Important stuff!

It is important that you are clear about employment status, i.e. worker, employee or self-employed as it will affect:

• Employment legal rights

• Tax https://www.gov.uk/guidance/check-employment-status-for-tax
• Liability issues https://www.hse.gov.uk/pubns/hse40.pdf

I always recommend that you use a written agreement to:

• Clarify the working relationship for:
  • Self-employed https://www.unltd.org.uk/uploads/general_uploads/DLA-Piper-Contractor-Agreement-Guidance-Note-and-Template.pdf
  • Volunteer https://knowhow.ncvo.org.uk/your-team/volunteers/keeping/volunteer-agreements
  • Worker https://www.gov.uk/employment-status/worker
  • Employee https://www.acas.org.uk/employment-contracts
• Outline the expectations on both parties
• Describe how you will work together in practice
• Clarify their rights

It is essential that this written agreement really does reflect what actually happens in practice!

Rights of worker vs employee

Workers that you employ on a casual basis, as and when required, do have some statutory rights as follows:

• The right to the national minimum wage
• Paid statutory annual leave of 28 days, which can include public holidays
• Rest breaks, e.g. 20 minutes after six hours work
• Maximum working week of 48 hours

Employees have many rights which include those above and also:

• Statement of written particulars of employment
• Itemised pay statement
• Unfair dismissal rights and statutory redundancy payment after two years’ service
• Statutory benefits including sick, maternity and paternity leave and pay
• Right to request flexible working
• And many more rights!

The future

Employment status is a complex area.  In the future the government may consider removing worker status.  Until then, you need to be aware of the issues to be able to find your way through the employment status minefield.

Sonia Wilson, HR Consultant, Populo www.populo.org.uk

Let me know what you think @sonia_wilson20 on Twitter or LinkedIn.

Sonia Wilson is an SSE fellow who participated in the Lloyds Bank and Bank of Scotland Social Entrepreneurs Start Up Programme at SSE Hampshire. Register interest in the programme for free learning (14 days spread over a year), mentoring, up to £7,000 grant and a support network. Sonia offers free HR advice via telephone to charities and social enterprises every Wednesday. Find out more about this offer here