Supporting good Practice in Managing Employment Relations (3MER)
Scenario
You have been asked to provide guidance to a local farm park. This is a relatively small
organisation with just 25 permanent employees. However during the summer months the
number of employees increases threefold due to the extra work that comes from local
tourists visiting the park.
A number of issues have arisen, and you are required to advise on each. There are 3
sections for each of the three learning outcomes. Each section should consist of
approximately 750 words
Learning Outcome 1: (750 Words)
Assessment Criteria: 1.1, 1.2, 1.3
The impact of employment law at the start of the employment relationship.
1.1 Describe at least two internal and two external factors that impact on the
employment relationship.
Choose 2 from each column – total of 4.
External Factors
Economic
Government
Legal
Social
Technological
Internal Factors
Culture
Procedures
Contracts
Trade Union
Organisation Structure and Strategy
Internal Labour Market
1.2 Explain the 3 different types of employment status
Types of Employment Status
Employee
Worker
Self Employed
In this section you should write about the tests to determine employment status: the
Control Test, Mutuality of obligation, Entrepreneurial Test, Multiple Test.
Reference: Employment Status: Questions and Answers, CIPD, November 2017;
Employees and Workers: Information on determining a person’s employment status, CIPD.
1
1.3 Identify and analyse two reasons why it is important to determine an individual’s
employment status:
Reasons why it is important
Tax reasons
Liability Reasons
Health and Safety Issues
Statutory Rights (e.g. employees have more rights than workers and self employed
individuals.
Reference: Employment Status: Questions and Answers, CIPD, November 2017;
Employees and Workers: Information on determining a person’s employment status, CIPD.
Learning Outcome 2: (750 words)
Assessment Criteria: 2.1, 2.2, 2.3, 2.4, 2.5
Understanding Individual rights of the employee during the employment relationship
2.1 Explain the importance of work-life balance within the employment relationship and
how it can be influenced by legislation. Refer to at least three employment rights from
the legislation
Refer to the Working Time Regulation (1998)
Highlight THREE rights from the regulation, such:
Working Time
Rest Periods
Annual Leave
Reference: Working hours and time off work: Understand the basics of the Working Time
Regulations, working hours trends, holidays and special leave, CIPD Factsheet, October 2017
2
2.2 Summarise the legal support that may be given to employees as a family member:
focus on TWO areas
Write a brief overview of the family friendly legislation and then focus on TWO key areas
such as:
Maternity/Paternity
Adoption
Time off for emergencies
Parental leave etc.
References:
Maternity, paternity and adoption rights: An introduction to maternity and paternity rights,
shared parental leave, and adoption rights; CIPD, October 2017.
Working hours and time off work: Understand the basics of the Working Time Regulations,
working hours trends, holidays and special leave, CIPD 2017.
Parental rights and family-friendly provision Q&As: Commonly asked questions on the legal
issues relating to parental rights and family-friendly provision; CIPD, July 2016.
2.3 Explain why employees should be treated equally in terms of pay – Give TWO
examples
Include two examples from:
Equal Pay Act
National Minimum/Living Wage
Right to itemised pay slip
References:
Equal pay: Explore the legal position in the UK surrounding equal pay as well as good
employment practices; CIPD, April 2017.
Statutory rates and compensation limits, CIPD, February 2018
The National Minimum Wage and Living Wage; www.gov.uk
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2.4 Summarise the main points of UK discrimination legislation and how this might affect
the approach to temporary employees. Refer to at least TWO forms of discrimination in
your answer.
Summarise the main points of discrimination legislation.
Describe the protected characteristics and the situations in which discrimination could
potentially apply.
Refer to at least two of the forms of discrimination: direct, indirect, victimisation and
harassment.
References:
What is discrimination?: Employers and Service Providers: Equality Commission:
http://www.equalityni.org/Employers-Service-Providers/What-is-discrimination
2.5 Psychological contract and how effective organisation contribute and affect it.
Explain the psychological contract and how it is not legally binding as an introduction.
Focus on how organisation policies affect and contribute to it, i.e. explain the link between
policies and the contract.
References: The Psychological Contract, CIPD Factsheet, January 2018
Learning Outcome 3: (750 words)
Assessment Criteria: 3.1, 3.2, 3.3
Understanding issues to address at the termination of the employment relationship
3.1 Explain the differences between fair and unfair dismissal including FIVE potentially
fair reasons for dismissal
Differences between fair and unfair dismissal
Explain FIVE potentially fair reasons for dismissal
Importance of ACAS Code of Practice: Disciplinary and Grievance Procedure
References:
Dismissal Procedures, CIPD Factsheet, April 2017.
Discipline and grievance at work: Learn the fundamentals of disciplinary and grievance
policies and practices in the workplace, CIPD Factsheet, August 2017.
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3.2 Explain the importance and benefits of holding exit interviews with employees who
are leaving the organisation.
Explain what an exit interview is; benefits/importance but also limitations.
Reference: Employee turnover and retention: Learn how to measure turnover and
retention, and understand why people leave organisations. CIPD Factsheet, December 2017.
3.3 Explain the process of redundancy.
Introduce what redundancy means.
Summarise the key stages to be followed to manage redundancy, including collective
consultation.
References:
Statutory rates and compensation limits, CIPD Factsheet, February 2018
Redundancy: an introduction: Learn how to use redundancy as a last resort when all
alternative approaches have been considered, CIPD Factsheet, March 2017.
REFERENCES
Remember to list all your references ……………
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Learning Outcome 1: 1.1, 1.2 and 1.3 – (750 words)
The impact of employment law at the start of the Relationship
The Employment Relationship
This is simply the relationship between the employer and the employee. There
are formal and informal aspects to the relationship and both parties have rights,
obligations and expectations. The formal rights side is regulated through the
provisions of the contract of employment and legislation sets common standards
for the conduct of the relationship. The informal side of the relationship is
governed by the psychological contract. The main task of those responsible for
managing the employment relationship is to develop appropriate policies, and
rules to promote good working relationships with those whom they employ.
Think of your own organisation:
• List all types of people or organisations that may be involved with and
impact upon the employment relationship.
• How many of these organisations or actors impact upon the day-to-day
relationship, and which affect the relationship infrequently?
Employee relations comprises:
•
•
•
•
•
Managing the employment contract and relationships
Ensuring compliance with employment law
Communication with employees
Promoting involvement and engagement
Collective processes of negotiation and consultation.
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Learning Outcome 1: 1.1 - Internal and External Factors that impact on
the employment relationship
External Factors
Economic
Government
Legal
Social
The economic environment has a huge impact on the employment
relationship. During a recession, it is difficult to find employment
and this leads to a buyer’s market whereby employers are able to
find employees relatively easily It can also lead to a low turnover
of existing staff as there are very few jobs to move to. Changes in
the economy have led to organisations having to change their
patterns of work, e.g. 24 hour shopping. Other economic trends
include the loss of high street business to internet shopping.
Organisations need to constantly change to meet the demands of
the economic environment and employees need to be multi-taskers
and be increasingly flexible.
Government policies impact on employee relations. Currently a
number of public sector worker are on a ‘pay freeze’ because of
the poor economic conditions. There are benefits and policies to
encourage the unemployed to apply for work. Other incentives
include Tax Credits and the government launches initiative
The legal environment will has a big impact on employee relations
including such legislation such as the Working Time Directive,
The Flexible Working Regulations, National Minimum Wage Act,
Trade Union and Labour Relations Act.
The Information and Consultation of Employees Regulations
(often abbreviated to the ICE Regs) were introduced on 6 April
2005 and apply to businesses with 50 or more employees. The
regulations give employees the right subject to certain conditions,
to request that their employer sets up or changes arrangements to
inform and consult them about issues in the organisation.
Information and consultation are the basic building blocks of every
effective organisation. Employees are consulted on a range of
issues including: organisational performance, management
performance, employee performance, job satisfaction etc
Today's turbulent business environment makes increasing
demands on managers and workforces, as competitive standards
rise and expectations of individuals increase. Managers must
respond positively to changes in contemporary workforce attitudes
if they are to get the performance levels they need. The social
environment has led to employees demanding a better work/life
balance; and flexible working. Promoting WLB and flexible
working enhances an organisation not only to employees but also
among customers and the wider community.
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Internal Factors
Culture
Procedures
Contracts
Trade Union
Organisational culture can be defined as “the way we do thing
around here”. The psychological contract would be an important
aspect of this and managing the informal employee relationship.
The informal employee relationship is important as it can
influence how far the employee is prepared to exercise
discretionary behaviour and work beyond the formal contract of
employment. The psychological contract offers a framework for
monitoring employee attitudes and priorities on those dimensions
which can be shown to influence performance.
Employees are increasingly recognised as the key business drivers.
The ability of the business to add value rests on its front-line
employees or 'human capital'. Organisations that wish to succeed
have to get the most out of this resource. In order to do this
employers have to know what employees expect from their work.
An organisation’s policies and procedures have an impact on the
employment relationship. Some policies are based on legal
requirements; but others are there to follow the latest development
in effective people management.
An organisation may offer different types of contracts of
employment – permanent, temporary, zero hours. A temporary
contract may have a specified termination date, and there is an
understanding that the job is not permanent. The worker may not
make a claim for unfair dismissal, nor are they entitled to
redundancy payments. A fixed term contract has a clearly defined
duration with a start and finishing date. With a zero hours contract
the worker is not guaranteed any paid work at all. The worker
must be available to be called upon when there is a need. This
type of contract may be offered to shop assistants to do casual
work at busy periods, e.g. at Christmas.What affect does the
various contrats have on staff relationships?
The role of a Trade Union is to represent the rights of its members
in terms of contractual pay and conditions but also gives a voice to
the workforce.
In recent years there has been a decline in the number of matters
dealt with on a collective basis and an increasing focus on
relationships with individual employees. This has resulted as there
has been a significant decline in trade union membership; a
significant decline in the number of employees covered by
collective agreements and the increasing importance attached to
the employee voice and employee involvement. In a recent CIPD
survey on employee relations, nearly 60% of respondents in
organisations recognise unions and think that unions exert a
significant influence on their organisation. Public sector
respondents are more likely to perceive trade union influence as
strong.
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Organisational
Structure and
Strategy
Organisations are downsizing and delayering so that remaining
employees have to do more. Employees may also need to be more
flexible in skills offered and be able to multi-task as markets,
technology and products constantly changing. Technology and
finance are becoming less important than human resources as
sources of competitive advantage. Traditional organisational
structures are becoming more fluid.
Internal Labour
Market
The internal labour market will have an impact on the employment
relationship. The characteristics of this would include the skill
level, type of work done. Etc. Highly skilled professional workers
may have a fair amount of autonomy in their work and in flexible
working conditions.
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Learning Outcome 1: 1.2 – Explain the 3 different types of employment
status
Employment Status
It is important to understand whether someone who is doing work for you is:
• an Employee
• a ‘Worker’
• self employed
There is quite a lot of uncertainty about differences between workers and employees and
the different rights that apply to them. It is important to determine employment status as
employers will be liable for the majority of employment rights of employees; with
workers having fewer rights.
Differences are determined by what are called ‘common law tests’.
Employees
There is an important legal distinction between these categories of employment status. A
person who is an Employee has a wide range of employment rights including:
• Unfair dismissal
• Statutory redundancy payment
• Maternity and Paternity leave and pay
• Parental leave
• The right to request flexible working
• Rights under TUPE
• Rights to preferred payments in the event of the insolvency of the employer.
Employees have a “Contract of Employment” and will receive benefits such as sick pay.
As an employee, your rights include all of the rights workers have, plus the right to:
•
•
•
•
•
•
•
•
a minimum statement of employment terms
Statutory Sick Pay
minimum notice periods if your employment will be ending (eg if your employer is
dismissing you)
protection against unfair dismissal
maternity, paternity and adoption leave and pay
request flexible working
time off for emergencies
Statutory Redundancy Pay
Some of these rights require a minimum length of continuous service with your employer
before you qualify for them.
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Some employees may also have enhanced entitlements, over and above their statutory rights.
These would be part of your employment contract's terms and conditions. For example, your
employer could decide to give you more generous notice periods or sick pay.
Workers
'Workers' are defined more widely than employees and are different from the genuinely selfemployed. The status of worker includes individuals working under a variety of contracts.
Employees are workers, but employees have different employment rights and responsibilities
than workers.
Agency workers and short term casual workers are likely to be workers, unless they are found
to be self employed.
As a worker you are entitled to core employment rights, including the right to:
•
•
•
•
•
•
•
receive the National Minimum Wage
protection against unlawful deduction from wages
a minimum period of paid holiday (annual leave)
minimum length of rest breaks
to not work more than 48 hours on average per week or to opt out of this right if you
choose
protection against unlawful discrimination (including less favourable treatment on the
grounds of part-time status)
protection for 'whistleblowing' (reporting wrongdoing in the workplace)
You may also be entitled to:
•
•
Statutory Maternity, Paternity or Adoption Pay
Statutory Sick Pay
However, the entitlement to these depend on a number of different things, including how
much the worker earns.
The key requirements for establishing 'worker' status are that the worker:
•
•
have to perform work or services personally and cannot send a substitute or subcontract the work
are not undertaking the work as part of your own business (eg if the 'employer' is
actually one of your clients)
So Workers have some employment rights such as protection from discrimination. However
Employees have additional rights including entitlement to written particulars of employment
and protection from unfair dismissal.
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Agency Workers
Whether or not an agency worker has the status of an employee is a fluid area and is
complicated by case law. If an agency worker is an employee of an agency with a contract
of employment then that is a clear position. However it is often not so clear-cut as this. The
Agency Workers Directive from The European Union gives temporary agency workers equal
rights to permanent workers after 12 weeks employment. This would mean comparable pay
and conditions including sick pay and holiday leave, but not other employment rights such as
the right to not be dismissed unfairly or the right to redundancy payments.
Self-employed
Employment legislation does not generally cover self-employed people because they are, in
effect, their own boss.
They are protected on health and safety grounds and, in some cases, protection against
discrimination.
Self-employed people are usually identified by the fact that they are in business for
themselves and provide a service to multiple clients. Self-employed people are generally
more independent than workers. They have far greater control over how and when to
deliver the service and who delivers it. They will usually be better able to protect their own
commercial interests, although they will bear any financial risk from the business they
operate.
It is important to realise that the distinction of employment status is not always clear-cut and
that employers may need to seek advice.
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The table below provides guide to help understand the employment status of different
people. The genuinely self employed have no employment rights unlike workers who
are protected by the National Minimum Wage Regulation, the Working Time
regulation and Equality rights. Table is drawn from the viewpoints of an Employer.
Employee
Worker
Self-Employed
S/he has a Contract of
Service
You pay by PAYE
Does the work personally
Has a Contract for Services
You pay an invoice
You pay on invoice
S/he is not VAT registered
S/he may be VAT registered
s/he prepares business
accounts
You set the working hours
Either may set the working
hours
S/he sets hours of workers
S/he can’t decline work
S/he can decline work
You can expect work
You cannot expect work.
You provide written
employment particulars
S/he would be subject to
disciplinary procedures
The contract may not be in
writing
S/he may need to respond to
complaints or may be
subject to procedures in
some cases.
S/he may use own
equipment.
S/he works usually for a
fixed time.
S/he can assign work to
others
S/he has no right to expect
work.
Contracts for each piece of
work could e written
S/he must be prepared to
respond to complaints but is
not subject to disciplinary
procedures.
S/he uses own equipment
S/he uses company
equipment.
S/he is employed for an
indefinite time
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The contract is by service,
not time.
Tests Used in Courts to Determine the Employment Relationship
•
The Control Test – What is the degree of control exercised by the employer The
higher the control an employer has over the employee, the more likely it is that they
are an employee.
o Do the employers’ disciplinary procedures apply to the worker?
o Who controls what work is done?
o Who controls where the work is done?
o What control is exercised over how the work is done?
o Who controls when the work is done?
o Who controls who does the work, particularly with respect to the right to
delegate, send a replacement or hire staff to help.
•
Mutuality of Obligation - The minimum would comprise an obligation on the part
of the client to pay the worker for work done and for the worker to be obliged to do
the work.
o How many engagements the worker performs and whether they are performed
mainly for one person or a number of different people.
o Commitment as evidenced by sick pay, holiday arrangements etc.
o Commitment as evidenced by guarantee of work and guarantee of service.
The absence of mutuality led to the conclusion that a worker was self-employed in a
case concerning the payment of income tax and national insurance in the case of
Parade Park Hotel v Comrs of HM Revenue and Customs which concerned a case
where a worker carried out maintenance work for a hotel. The hotel did not have to
offer him work, he was under no obligation to accept work and he provided his own
tools and equipment. It was held that he was self-employed.
•
Entrepreneurial Test - The problem is looked at from a self-employed person’s
point of view and the question asked “Is he in business on his own?”:
Does he provide his own equipment?
Hire his own helpers?
Is there any degree of financial responsibility or degree of risk
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•
The Multiple Test – All the factors should be looked at and weighed up – no single
factor can be conclusive. Using the multiple test an employment tribunal would take
the following factors into account:
o The contractual provisions
o The degree of control exercised the employer
o The obligation on the employer to provide work
o The obligation the employee to do the work
o The provision of tools, equipment, instruments.
o The arrangements made for tax, national insurance, SSP, VAT
o The opportunity to work for other employers
o Other contractual provisions, including holiday pay, sick pay, notice,
o Whether the relationship of being self employed is a genuine one or whether
there was is an attempt to avoid modern protective legislation.
o Power to substitute another worker
o Whether the worker is ‘part and parcel’ of the other’s organisation.
o The length of the relationship.
Which working Relations may give rise to difficulties concerning employee
status?
Some examples of working relationships which often give rise to uncertainty surrounding
employee status include for example: agency workers, casual workers, seasonal workers,
consultant, homeworkers, teleworkers, pyramid sellers, temps, occasional workers, irregular
workers, students, freelancers, clergy, fixed-term workers, cleaners, dentists, doctors lorry
drivers, milkmen etc.
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Learning Outcome 1: 1.3 – Analyse two reasons why it is important to
determine an individual’s employment status
Why the Distinction is Important
There are a number of reasons for stressing the importance of this distinction between a
Contract of Service and a Contract for Services.
Tax Reasons
Under the Social Security Contributions and Benefits Act 1992, an employer must pay
secondary Class 1 contributions in respect of employed earners. Self employed earners pay a
flat-rate Class 2 contribution and in addition a Class 4 contribution based on the gains or
profits derived which are chargeable to income tax. They must also complete their own self
assessment tax form. The employer does not need to deduct PAYE income tax in respect of
his self employed contractors. But it is stressed that it is the substance of the relationship that
will count, not the form. Thus if a person is an employee in the legal sense, the employer’s
obligation will arise despite any artificial attempt or arrangement made to avoid such duties.
In Jenning v Westwood Engineering Ltd the applicant was offered employment. He was told
that he could work at a lower rate of pay on PAYE, or at a higher rate, paying his own tax
and insurance, and he chose the latter option It was held that he was employed under a
contract of employment nonetheless.
With regards the national insurance contributions and administration there is financial gain in
being self-employed as they don’t pay the same contributions.
Liability Issues
An employer will not normally be vicariously liable* for the civil wrongs committed by
independent contractors whereas he would be so liable for torts** committed by his
employees in the course of their employment which cause injury or damage to third parties.
In Hillyer v St Bartholomew’s Hospital the plaintiff was liable,because the consultant was an
independent contractor who was merely using the facilities of the hospital. On the other
hand in Cassidy V Ministry of Health, a resident surgeon operated negligently on the
plaintiff, and it was held that the hospital board as the employer was liable.
*Vicarious liability – an employer is liable for the actions of employees during the course of
employment.
**Tort law deals with situations where a person's behaviour has unfairly caused someone
else to suffer loss or harm. A tort is not necessarily an illegal act but causes harm.
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Health and Safety Issues
An employer owes a duty at common law to his employees to take reasonable care for their
safety, whereas these duties do not normally apply with respect to his independent
contractors. The duties owed by the employer to his employees under the Health and Safety
at Work Act 1974 are more extensive than those owed to independent contractors. In
practice this may mean a self-employed person who is injured whilst at work may be unable
to claim any compensation from the employer, and additionally will be unable to claim
industrial injuries benefit and/or sick pay.
Statutory Rights
Many statutory rights apply only to employees, not to workers. For example an employee is
entitled to all the rights contained in the Employment Rights Act, including a written
statement of terms of employment, itemised pay statement, maternity, paternity, parental and
adoption rights; time off work, unfair dismissal, redundancy rights etc. The Flexible
Working Regulations, Fixed-term Employee Regulations, Transfer of Undertaking
Regulations etc apply to employees as does the Health and Safety at Work Act and many
regulation issued
On the other hand, the protection of wages, Part-time Workers Regulations, Working Time
Regulations, the various pieces of discrimination legislation, the National Minimum Wage
Act and part of the Trade Union and Labour Relations Act apply to workers as well as
employees.
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Employment Status: Questions and Answers, CIPD, 2017.
The gig economy is a product of the digital age. It is a separate way of working with people
undertaking temporary jobs or doing separate pieces of work, rather than working full time
for an employer. Organisations may enter into short-term contracts with individuals who may
be categorised as workers or employees
The arrangements for those working in the ‘gig’, or ‘on demand’ economy (for example,
couriers at Deliveroo, or drivers for Uber) may create uncertainties concerning their
employment status.
The categorisation difficulties for those working in the gig economy may be similar to issues
surrounding part-time or casual workers. Simply because an individual works part time or
works in the gig economy does not mean that they are not an employee – they may be an
employee who works fewer hours.
Case law
Case:Aslam v Uber B.V (2016) and Uber B.V. v Aslam (2017)
Type of work: Uber drivers
Status: workers
This test case for the tens of thousands of drivers working for Uber involved a careful
analysis of the employment status of two drivers working for the smartphone app. Passengers
use the app to locate a nearby driver to take them to their destination.
The drivers did not claim they were employees, but workers and, therefore, entitled to a
minimum wage under the National Minimum Wage Act 1998 and to paid leave under the
Working Time Regulations 1998.
At an employment tribunal, Uber maintained the drivers were running their own businesses
as third-party contractors and, therefore, did not have worker rights. The company asserted it
was only a technology platform and not a transportation business, although it had Passenger
Service Vehicle licences under which the drivers operated.
The following factors were relevant to the ET's decision that the Uber drivers were workers:
•
•
The drivers provided their work under a contractual relationship and made themselves
available to carry passengers to their destinations for payment
Drivers could not develop their own businesses. For example, fare calculations were
done by Uber, and deductions could be made to the drivers’ payments if passengers
complained about overcharging.
The decision that the estimated 46,000 Uber drivers are considered workers, has significant
repercussions including a number of employment rights such as:
•
•
5.6 weeks of paid annual leave each year
48-hour maximum working week
1
•
•
protection from unlawful deduction from wages
national minimum/living wage.
An appeal from Uber against the ET's findings was dismissed by the EAT in a judgment on
10 November 2017. Uber is expected to appeal the EAT judgment too. The company is also
embroiled in an appeal against TfL’s decision on 22 September 2017 not to renew its licence
due to an alleged lack of corporate responsibility in relation to public safety and security.
Other cases
So far, decisions involving individuals in the gig economy indicate that many working
arrangements will attract ‘worker’ status. Businesses operating within this sector have
differing models and the area of law remains confusing; an employment tribunal could easily
reach a different conclusion in similar cases. Other on-going cases involve courier companies
eCourier and Excel. The gig economy has grown massively and organisations using such
workers need clarity about the contractual and legal basis of their arrangements.
(See Future developments for further information, including the Taylor review into modern
working practices, which has considered the rights of those working in the gig economy and
‘worker’ status generally.)
Case: Smith v Pimlico Plumbers (2017)
Type of work: plumber
Status: worker
Relevant factors:
•
•
•
The plumber wore a branded uniform and had to work to company standards
Customers made payments to the company rather than to individual plumbers
There was no right of substitution.
In this case, a plumber requested reduced hours following a heart attack. The refusal of this
request led to unfair dismissal, disability discrimination and holiday pay claims. For the
unfair dismissal claim, he had to show he was an employee. For the remaining claims, he had
to show he was a worker.
The Court of Appeal decided he was a worker but did not address whether he was an
employee, as the plumber did not appeal against the employment tribunal’s previous finding
that he was not. A key factor was that there was no right of substitution. This suggested a
contract to work personally, rather than pure self-employment.
The judgment emphasised that an unlimited right to substitute another worker suggests there
may be genuine self-employment. However, a limited right to substitute a worker, for
example, in cases of illness, can be consistent with a contract to work personally and can still
lead to a finding of worker status.
The case has been appealed again and is expected to be heard in the Supreme Court in
January 2018.
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How can employers work out if someone who is working from them is an
employee?
This question is crucial, yet is difficult to answer because there is no detailed definition of
who is an ‘employee’ in the legislation. Accordingly, this question is decided by courts and
tribunals on a case-by-case basis, and some guidelines for determining employment status
have been laid down in various cases over the years.
To decide if a particular worker is an employee the first item to consider is ‘control,’ in
other words:
•
•
•
•
•
who controls what work is done
who controls where the work is done
what control is exercised over how the work is done
who controls when the work is done
who controls who does the work, particularly with respect to the right to delegate, send a
replacement or hire staff to help.
The higher the degree of control, the more likely it is that an employment relationship exists.
The next key factor to look for is what is known as ‘mutuality of obligation', which is the
obligation of the employer to provide work and the worker to do it. This will be indicated by:
•
•
•
how many engagements the worker performs and whether they are performed mainly for
one person or for a number of different people
commitment as evidenced by sick pay, holiday arrangements and so on
commitment as evidenced by guarantee of work and guarantee of service.
Where mutuality is present, there is likely to be an employment relation
Other factors to consider when deciding whether an existing staff member is an employee,
organisations should also consider:
•
•
•
•
•
•
•
•
•
•
•
•
•
the length of the relationship
the method of payment agreed by the parties
who provides the equipment needed to get the job done
the degree of financial risk
the degree of responsibility for investment and management
the opportunity to profit from sound management in the performance of the task
the labels or intentions of the parties
whether the person performing the services has set up in business on their own
account
the degree of continuity in the relationship
whether the worker works mainly for one person or for a number of different people
whether the worker is ‘part and parcel’ of the organisation
tax treatment may also be an indication, but not a conclusive one
whether the worker can send a substitute to carry out the work.
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Future world of work and rights of workers inquiry
Some 4.79 million people are thought to be currently self-employed and 1.66 million
employed on a temporary basis.Technology has changed the world of work and there is a
need to balance the benefits of flexibility and the risk of exploitation. Several high-profile
tribunal cases involving those working in the digital or ‘gig’ economy have focused political
attention on the status and rights of workers in this sector. Many individuals cannot be
certain what their employment status is until they are dismissed.
Two government select committees launched separate inquiries into the gig economy and
workers’ rights, and Theresa May commissioned a third, the Taylor Review, into modern
employment practices. The core issue behind all these inquiries is whether the law’s approach
to employment status can cope with new forms of work arising out of the digital economy, as
illustrated by companies such as Sports Direct, Asos, Hermes, Uber and Deliveroo.
The Taylor review
‘Good work: the Taylor review of modern working practices', published July 2017, has called
for worker status to be replaced with ‘dependent contractor’ status. This would create a
greater distinction between such workers and those who are genuinely self-employed or
employed. The report makes a number of key recommendations.
Employment status
The report suggests:
•
•
•
•
•
retaining the current three-tier approach, but renaming those eligible for worker rights (but
who are not employees) as ‘dependent contractors’
setting out the key principles of the employment status tests in legislation, with additional
guidance
providing an online tool to decide employment status in the majority of cases
placing less importance on the requirement to perform work personally in developing the
new ‘dependent contractor’ status
placing more emphasis on control in the definition of ‘worker status’.
•
Dependent contractors This category would be given additional employment
protections, including the right to a written statement of particulars, some minimum
pay rights, and the ability to receive rolled-up holiday pay.
•
Gig economy
The report suggests amending the law on the National Minimum Wage so that gigeconomy workers allocated through an app are considered to be undertaking a form
of output work and will not have to be paid the NMW for each hour they are logged
on when there is no work available.
4
Tax
There is a recommendation to align employment status with the tax status framework in
order to reduce differences between the two systems. For example, where a tribunal decides
an individual is an ‘employee’ for tax purposes, that decision should also apply for
employment law purposes.
Employment tribunals
Significant reforms to the tribunal process are also put forward, including quick preliminary
tribunal hearings to decide employment status and placing the burden on employers in a
tribunal claim to prove that the claimant is not an employee.
Agency workers
Suggestions include:
•
•
•
providing transparent information to agency workers, including rates of pay and details of
those responsible for paying them
introducing a right to request a direct contract of employment for agency workers placed
with the same hirer for 12 months
improving monitoring of umbrella companies and other intermediaries in the supply chain.
Zero hours contracts
The report suggested not banning these, but giving individuals the right to request a
guaranteed hours contract after 12 months. The guaranteed hours could be based on the
average weekly hours worked over the previous 12 months.
Self-employed workers
On this issue, the report suggests reintroducing the NI reforms abandoned after the 2017
spring budget, making NI contributions paid by employees and self-employed people more
equal. It also recommends improving self-employed rights including pension provision and
parental leave.
Other wide-ranging aspects covered in the review include further measures to prevent
pregnancy and maternity discrimination, reforms to sick pay, and new duties on employers to
report the use of agency workers and zero hours contracts. The recommendations encompass
many aspects of the working relationship, not just for those working in the gig economy. If
the proposals are implemented with the correct guidance, this may go some way to
addressing the many issues surrounding employment status and rights in the modern
workplace.
The government is expected to respond to the Taylor recommendations by the end of 2017.
5
uitis
te
Unit Nols
Supporting Good Practice in Managing Employment
Relations
3MER
Level
3
Credit value
6
Assessment method
Written response
Expiry Date
September 2018
Learning outcomes:
1. Understand the impact of employment law at the start of the employment relationship.
2. Understand the main individual rights that the employee has during the employment
relationship.
3. Understand the issues to address at the termination of the employment relationship.
Assessment
Criteria
Assessment Brief 301418
You have been asked to provide guidance to a local farm park. This is a
relatively small organisation, with just 25 permanent employees.
However, during the summer months the number of employees
increases threefold due to the extra work that comes from local tourists
visiting the park.
A number of issues have arisen, and you are required to advise on
each. To assist you in your deliberations, the issues have been
grouped into three sections.
You should provide a written response to the employer, with
approximately 750 words for each of the three sections.
1. With the significantly increased workforce during the summer
months, it is always difficult to predict what the actual workforce
needs will be:
1.1
i.
1.2
ii.
Describe at least two internal and two external factors that
impact on the employment relationship.
The employer is not sure whether the individuals who
work on a temporary basis during the summer months are
employees or not. Explain the different types of
employment status that exist so that the employer is
aware of them all.
Using at least two examples, identify and analyse for the
employer why it is important to determine the employment
status of the individuals working at the park.
1.3
iii.
2. The work can be very demanding during the summer months. There
have been occasions in the past when some of the temporary
2.1
39
co
employees are working very long hours, and complaining about this.
Explain the importance of work-life balance within the
i.
employment relationship and how it can be influenced by
legislation. Refer to at least three employment rights from 2.2
the legislation.
ii. Focussing on two key areas, summarise the legal support 2.3
that may be given to employees as a family member.
iii. Using two examples, explain why employees should be
2.4
treated equally in terms of pay.
iv. Summarise the main points of UK discrimination
legislation, and how this might affect the approach to 2.5
temporary employees. Refer to at least two forms of
discrimination in your answer.
Explain how effective organisational policies can
contribute to and affect the psychological contract.
V.
3.1
3. The last summer brought about some significant problems relating
to the permanent employees. The employer is concerned that the
issues were not addressed correctly. Advise the employer about the
following:
3.2
i.
ii.
3.3
The differences between fair and unfair dismissals
including five potentially fair reasons for dismissal.
During the summer five of the permanent employees
resigned. Explain the importance and benefits of holding
exit interviews with employees who are leaving the
organisation.
Finally, the employer has a question for the future. The
farm park has been struggling. If it were to make up to 10
employees redundant what process should it follow?
iii.
Evidence to be produced
Written answers to questions of approximately 2250 words in total.
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