Employment status guidance to help smaller businesses

Employment status guidance to help smaller businesses

Published: August 15th, 2022

Employment rights and protections, especially for those working in the so-called “gig economy”, can often be a tricky and confusing minefield for businesses to navigate. 

The government has now issued new guidance aimed at clarifying the rules around employment status and how that affects things like pay, holiday entitlement, sick pay, parental leave and working conditions. 

The guidance is split into two separate guides, with one for employers and HR professionals and the other for individuals in or seeking work. It is particularly aimed at smaller businesses which might not have access to expert legal and HR advice. 

The guides use real-world scenarios to explain what should happen in each situation, and are intended to help smaller businesses to avoid potential legal action and fines which breaking the rules – even accidentally – might incur. 

The guidance also helps employees to see at a glance what their rights and entitlements are, meaning they can have informed conversations with employers about potential conflicts and understand the steps they need to take to put right any wrongs. 

The guidance explains that individuals are roughly divided into three status groups: 

  • Employees
  • Workers (also known as limb (b) workers)
  • Self-employed

Employees have the most employment rights and tend to be in more secure roles, while self-employed people work on their own behalf and have fewest rights, other than some health and safety protections whilst contracted to others.

The workers group is where confusion about employment status and rights is most likely to occur, and where employers are most likely to breach their obligations. 

This group often work more flexibly and with less fixed hours and have fewer rights than employees, but they are still entitled to a core set of protections. Individuals on zero hours contracts and in the gig economy often fall into this category. 

The guidance makes clear that employers cannot just choose an individual’s employment status – that is determined by what the individual actually works, rather than the title assigned to them. Labelling someone as self-employed doesn’t necessarily make them self-employed if their working patterns and conditions are actually those of a limb (b) worker. 

The full guidance is available on the government website gov.uk

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