It might seem like an obvious question. You pay them, they sort their own taxes, so that means they’re self-employed, right? The answer is not quite so clear cut in Employment Law…

The law around whether somebody is an employee, a worker, or a self-employed contractor is quite grey and difficult to wade through and as such, it can put employers at risk, as Uber recently found out in their case heard at the Supreme Court.

The Uber drivers believed that they were workers, rather than self-employed and as such, should be entitled to annual leave and at least minimum wage. Uber argued that the contracts signed by the drivers were not contracts of employment, they even stated the clause “no employment contract has been formed between the partner and Uber”. But as they came to realise, simply relying on what was said in the contracts, didn’t stand up in court.

As an employer, you need to provide different types of workers with different types of rights. These differ between those employed, those employed as a worker, and those hired as a self-employed contractors.

It might seem obvious that everyone who works for you is a ‘worker’, but again, it’s not so black and white. There are three types of people who can work for you - an Employee, a Worker, or a Self-Employed Contractor. A worker is often described as a “halfway house” between the other two.

It is important to understand what type of workers you have as they have different employment rights and it makes a big difference should your Practice ever need to make redundancies or go through TUPE.

Workers, Employees, and Self Employed Contractors - which one is your Locum?

To determine their employment status, you need to look at both their contract and their relationship with the Practice. These bullet points are a guide, not all points must be met to determine a specific individual's employment status.

Employees are usually the easiest to determine. They work for an employer under an employment contract.

Your Locum is most likely to be an Employee if:

• they’re required to work regularly unless they are on leave (maternity leave, holiday, sick leave, etc.)
• they’re required to work a minimum number of hours and expect to be paid for the hours worked
• they have a manager or a supervisor
• they could not send someone else to do their work
• They get holiday/ holiday pay
• They’re entitled to contractual Maternity Pay/ Paternity Pay/ Statutory Sick Pay
• They can join the businesses pension scheme
• The practices disciplinary and grievance procedures apply to them
• They work at the practices premises, or at an address dictated by the practice
• Their contract sets out redundancy procedures
• The business provides the tools, equipment and materials to carry out their job
• They only work for the practice
• Their contract/ offer letter/ statement of terms and conditions use words such as “employer” or “employee”.

They are likely to be a Worker if:

• They have a “contract” setting out work or services for a personal reward.
• Their reward for the work is money or a personal benefit (such as securing a contract in the future)
• They only have a limited right to send someone else to do their work
• They have to turn up for work, even if they don’t want to
• You provide work for them for as long as their contract lasts
• They aren’t doing work as a “limited company” (where the practice is the customer)
• They still get paid holiday
• The business provides the tools, equipment, and materials to carry out their job
• The business deducts tax and national insurance contributions from their pay
• If a worker meets the eligibility criteria, they are still entitled to maternity pay/ paternity pay and statutory sick pay.
• Work may be more “casual” and not guaranteed
• Work offered does not need to be accepted

A Self-Employed Contractor:

Your Locum could be classed as self-employed in Tax Law, but not self-employed in Employment Law.

To be classed as Self-employed in Tax Law (exempt from PAYE):

• A person is self-employed if they take responsibility for their business and its success or failure.
• They can work for more than one practice
• They use their own money to buy any assets, tools, equipment, etc. necessary to carry out their role
• They are responsible for fixing any unsatisfactory work in their own time
• They decide what work they do, when and how to do it
• They can hire someone else to come and do their work

To be classed as Self Employed in Employment Law:

• All/ most of the above to be exempt from PAYE
• Responsible for their own National Insurance and Tax contributions
• They put in bids or give quotes for their work
• They are not under direct supervision when working
• They submit invoices for work they have done
• They don’t get holiday or sick pay
• They operate under a contract that uses terms such as “self-employed” or “contractor”

Employment Rights for Workers, Employees, and Self Employed Contractors

If someone is employed as a Worker:

• Should get the National Minimum Wage
• protection against unlawful deductions from wages
• the statutory minimum level of paid holiday
• the statutory minimum length of rest breaks
• to not work more than 48 hours on average per week or to opt-out of this right if they choose
  protection against unlawful discrimination
• protection for ‘whistleblowing’ – reporting wrongdoing in the workplace
• to not be treated less favourably if they work part-time

Workers may also receive some statutory payments such as Maternity/ Paternity/ Sick Pay etc.

Workers are not entitled to:

• minimum notice periods if their employment will be ending, for example, if an employer is dismissing them
• protection against unfair dismissal
• the right to request flexible working
• time off for emergencies
• Statutory Redundancy Pay

If someone is Employed: 

They receive all the rights mentioned above that workers receive, but also:

• parental leave and pay
• shared parental leave and pay
• maternity, paternity, and adoption leave and pay
• parental bereavement leave and pay
• time off for dependants
• time off for public duties
• redundancy pay after 2 years' continuous service
• being able to claim unfair dismissal after 2 years' continuous service
• getting the minimum notice period if they are dismissed or made redundant
• the right to flexible working requests after 26 weeks' continuous service
• protection against dismissal or suffering any detriment if taking action over a health and safety issue

As an employee, you also have protection against dismissal or experiencing any 'detriment' if you:

• reasonably believe being at work or doing certain tasks would put you in serious and imminent danger
• take reasonable steps over a health and safety issue
• inform your employer about your health and safety issues in an appropriate way

If you hire a self-employed contractor:

A self-employed contractor is not paid through PAYE. Employment law doesn’t cover self-employed people in most cases because they are their own boss. A Self-Employed contractor does not accrue holiday and is not entitled to sick leave.
However, they do:

• still have protection for their health and safety and, in some cases, protection against discrimination
• have their rights and responsibilities set out by the terms of the contract they have with their client

It can be difficult to determine the employment status of your Locum, or even other workers, such as those on a zero-hour contract, but it is important to be clear about the employment rights that each person is entitled to.

For more information please refer to the BMA website to view guidance for locums and employers, available here. If you are an FPM Member and have any questions or are worried about the employment status of any of your workers, submit a question for our HR query line via the link in FPM Core.