Defining the correct employment status of someone who works for you has become increasingly complicated but also increasingly important. Most farming businesses that employ people do so in a number of different ways - direct employees, contractors, and casual workers - and failure to correctly categorise the nature of the employment relationship could expose you to a challenge that could end up in an employment tribunal.
If one of your workers claims that under employment legislation they are entitled to more rights than they are receiving (such as statutory sick pay or statutory redundancy pay), any investigation would hinge on the facts and not necessarily what you may have agreed. There is also an additional risk of an investigation by HMRC if you’ve categorised someone’s employment status incorrectly as the tax treatment of self-employed workers is different to employees and workers.
Defining employment status
The breadth of employment protection rights has increased substantially over the years but not all are available to all workers (confusingly, an employee can be a worker but not vice versa). For the purpose of employment law there are three status categories: employee, worker, and self-employed. Employees have the highest level of employment protection whereas the self-employed have very few. Given the seasonal nature of much farming work, you may employ various casual workers either for a specific period or on a zero-hours contract, calling on them as and when needed. In these cases, the line can become very blurred between ‘worker’ and ‘self-employed’, with the former being able to claim employment protections not available to the latter.
Employed: An employee is someone whose hours, place of work and workload are controlled by you. You are obliged to provide them with work and determine how it should be done and they, in return, are obliged to carry it out. They do not have the right to substitute someone else to do their work, and they do not provide their own equipment. In return, they enjoy comprehensive employment protection rights, such as statutory minimum notice, the right to request flexible working (currently after 26 weeks’ service) and being able to claim unfair dismissal after two years’ continuous service. Employees also have the right to parental leave and pay, parental bereavement leave and pay, time off for dependants and public duties, as well as protection against dismissal or suffering detriment if they are taking action over a health and safety issue.
Worker: A worker is a rather more ambiguous term, floating as it does between employed and self-employed status. It is worth noting that the term “worker” could include agency workers, freelance workers and also zero-hours contract workers. Casual workers will probably fall into this category as their hours are likely to be irregular and they are not obliged to accept work offered (likewise, you are not required to offer work). However, when they are working for you, you do have control over their workload, and they cannot substitute anyone else to carry out the work they have agreed to do themselves. Although they have significantly fewer employment rights than employees, they retain the right to paid holidays, the national minimum wage, and protection against unlawful discrimination. However, unlike employees, they do not have the right to sick leave and maternity or other types of parental leave (however they may be entitled to Statutory Sick Pay (SSP) and maternity, paternity and adoption pay).
Self-employed: Self-employed workers, such as the owner of a company or a freelancer, set their own work schedules and negotiate their own rates of pay with you, invoicing you for work done rather than receiving a wage. They have the right to substitute someone else if they are unavailable, provide their own equipment, and are free to work for other people. Individual contractors undertaking time-limited projects, such as harvesting, usually fall into this category. They are also responsible for paying their own tax and NICs and have limited employment rights (such as the right not to suffer discrimination).
Avoiding a claim
It is your responsibility as an employer to determine the employment status of your workers and it can be expensive if you get it wrong. There have been several court cases in the last few years, primarily concerned with the rights of workers operating in the gig economy, and the upshot of the majority has been a strengthening of protections for workers. The government has issued guidance on the matter which can be found on the gov.uk website but if you are in any doubt, we would be happy to advise you. This is definitely a case of a ‘stitch in time saves nine’.
