Employee, worker or self-employed – are you clear on the difference in status?   

The size of the workforce on your farm is likely to increase and decrease across the seasons, for example when the workload increases for lambing or harvest. Nowadays there is all manner of flexible solutions, but it is important that farmers take care to ensure they are clear about the employment status of each person who works on the farm.

HMRC and employment tribunals are red-hot on ensuring that a worker’s employment status is correctly categorised and they will look beyond any contract to see what happens in practice.

‘It is up to you to ensure that you categorise and treat people consistently, so it pays to be au fait with the different worker classifications,’ says Kalpesh Nakeshree, Head of Employment at Ware & Kay and Pearsons & Ward Solicitors in Malton (part of Ware & Kay in York and Wetherby) as getting it wrong can be costly.

There are three classifications of employment status: employee, worker and self-employed under employment law. Confusingly, there are only two categories (self-employed and employed) for HMRC purposes.

Classification is defined by a number of factors, with each category having different entitlements and obligations. These include:

• the extent of an employer’s control;
• the worker’s right of substitution;
• any mutual obligation to provide and be available for work;
• pay and benefits;
• taxation; and
• nature of the engagement and financial risk.

Employees

Employees have a right to be provided with work and get paid for it on a regular basis, even if there is not enough work to fill their time. They are obligated to do the work provided, and they are not entitled to provide a substitute if they are not available. The employer has control over what they do and when they do it.

The term of their engagement is generally unspecified (unless they are on a fixed term contract); they are usually entitled to benefits including national minimum wage; holiday, sick, notice and redundancy pay, as well as maternity, paternity or adoption leave. They have the right not to be unfairly dismissed; and they should be equipped with the tools needed to work safely. The employer must pay their tax and national insurance (NI) contributions.

Self-employed

You might sometimes call on a self-employed person to carry out specific seasonal tasks such as calf-rearing, lambing, tractor work; or you might call on them to cover for another member of staff who is on holiday or sick.

They are not entitled to be provided with work, and are they are not obliged to accept or do any work offered. It is up to them how, when, and where they work.

A self-employed person can provide a substitute to carry out the work if they wish, and they can work for as many organisations as they like. They are paid for the work they do as per the agreement with the employer, and they are not entitled to the benefits enjoyed by employees. They will usually provide their own equipment, and they must pay their own tax and NI contributions.

Workers

Farmers might take on casual workers on a temporary basis at busy times of year, such as harvest time. Workers are entitled to some rights enjoyed by employees such as the National Minimum Wage, paid holiday, automated payslips, protection against unlawful discrimination, and written terms of engagement. They must do the work asked of them and are not entitled to provide substitute labour.

How we as your solicitor can help

Even though you may think you have hired someone on a self-employed basis or as a worker, they may actually fall into the employee category if the terms of their engagement meet the relevant criteria. For example, if you do not allow a self-employed person to provide a substitute, or you control when, how and where they work, then an employment tribunal or HMRC may feel they should be put ‘through the books’ and you could face a hefty tax bill or find yourself on the wrong end of an employment tribunal ruling.

Our team of employment specialists can draw up watertight employment contracts and worker or consultancy agreements which make it crystal clear the basis upon which someone is engaged. They will also explain the do’s and don’ts, from an employer’s point of view, for all the worker categories to ensure you do not end up in legal hot water.

For more information please contact our Head of Employment, Kalpesh Nakeshree on York 01904 716000, Wetherby 01937 583210 or Malton 01653 692247 or email kalpesh.nakeshree@warekay.co.uk to see how we can assist.