With many different categories of working person, each with their own characteristics, it is often difficult to tell who falls into what category. Although it is not always easy to be sure, a person’s entitlement to claim unfair dismissal, the minimum wage or statutory sick pay can often depend on correctly identifying which category a person falls into.
The purpose of this guide is to give a brief overview of what distinguishes one type of working person from another and each category’s protections and entitlements.
Categories of working person
An employee works under an employment contract and s/he is obliged to perform services personally for the employer. The employee is required to carry out work and the employer is required to pay for the work done. Therefore there is a mutually of obligation between the parties.
One key element of a contract of employment is that it is an agreement by the employee to serve their employer personally rather than allowing for a substitute to do the work. This is one aspect which makes a contract of employment different from a contract for services in that the latter involves the provision of services but, not always personally. Lastly, an employer also needs to have a sufficient level of control over the duties of the employee.
A director of a company is an office-holder who owes legal duties to the company including the requirement to act in the Company’s best interests. As well as being an office-holder, a director can also be an employee or self-employed. Executive directors are more likely to be employees of the company whereas non-executive directors are more likely to be self-employed. This is however, only a general rule and when considering if a director is actually an employee, the tests for employment, described above should be considered.
Part-time and Fixed-term employees
A part-time employee is a type of employee who works for an employer for less than the employer’s normal working week. A fixed-term employee is a type of employee who works under a contract of employment which terminates either on a set date, after a certain period of time or on the happening of a certain event. Part-time workers (which includes employees) and fixed-term employees have special legal protections against less favourable treatment or suffering a detriment when compared with their full-time or permanent colleagues.
A worker covers a wider number of people than an “employee”. Like an employee, it is necessary to perform services personally. However if some of the other requirements of being an employee are missing and the person is not offering their services to the world at large but to a specific business or individual, then such person is likely to be considered a worker. This category can therefore include casual and freelancers provided that they work exclusively for one organisation.
An agency worker describes an individual who is hired by an employment business to work for one of the employment business’ customers (often called the “end user”). Agency workers do not consistently fall into one category of working person, but depend on the structure by which they are hired. As such it is possible for an agency worker to be an employee of the employment business, a worker or self-employed with the catagorisation being determined on a case-by-case basis.
An apprenticeship is a type of employment. However, whilst the role of an employee is to serve their employer, an apprenticeship places an extra duty on the employer by requiring the employer to train the apprentice to a certain standard (often evidenced by qualifications) over a fixed term. The fixed term will therefore reflect the time it is expected for the apprentice to reach the required standard and to become “time served”. If a contract for apprenticeship is prematurely terminated, then the employer is likely to have to pay compensation for the loss of training, as well as for loss of wages.
A consultant is normally self-employed and in business on their own account. This category may include a freelancer. S/he will typically be engaged by an organisation to complete a certain task or project, often on a short term basis providing their specialist knowledge and skills. The individual may provide their services through a professional service vehicle. How the consultant goes about completing the tasks is often largely up to him or her providing s/he meets the conditions s/he has been engaged under. A consultant can often sub-contract parts of their task to others and will typically use their own equipment (if necessary) for the job. Consultants do not receive employee benefits. These types of working person may be caught by HMRC’s IR35 legislation.
An intern is somebody who works generally at an organisation in return for the chance to learn new skills and to gain experience related to a particular work environment. This type of work may or may not be paid. Also, an intern may or may not be considered an employee.
A volunteer is traditionally a person who offers his or her services to a business, charity or non-profit making body. Whilst the volunteer is unpaid, s/he may get some form of contribution towards the expenses s/he incurs through volunteering.
Entitlements and protections
The table below summarises some of the key entitlements and protections that the above different types of working people can benefit from.
For each entitlement, there are often a number of requirements which need to be met before the entitlement or protection is earned with, for example, time served in their position being a common requirement. For other requirements, such as a right not to be discriminated against, protection is available from day one.
Authors: Suzanne Horne, Partner at Paul Hastings Janofsky & Walker (Europe) LLP, and Rex Nicholls, Trainee Solicitor at Paul Hastings Janofsky & Walker (Europe) LLP