News & Views

Unfogging the “Employee Status” mist

BY Anita Mulholland
Employment law
BG Purple

Many may be ashamed to admit it, but in reality one of the hardest conundrums for employers to determine is whether their staff actually are employees…

Many believe the answer is simple but in reality the subject can provoke substantial academic debate. Most recently we have seen a mass of negative publicity over the villainous “zero hour” contract, but in reality this debate has brought to the forefront the difficulty in establishing an objective standing on employee status.

In response to nationwide argument, Business Secretary Vince Cable has commissioned a review of the employment status of workers. The aim is to examine the current system and streamline it so that it can be clearer for both employers and employees to work with. It is understood that the review will seek to look at the makeup of the UK workforce to assess whether there is a disproportionate number of casual workers. If this is the case then the review may consider the possibility of extending some employment rights to workers, which in turn may encourage employers to take on more permanent staff moving forward.

Vince Cable explained that he finds it understandable that the workforce in Britain became much more flexible during times of recession. This resulted in the increased use of zero-hour contracts, casual contracts and flexible terms and conditions which met the needs of the market climate and sustained employment at the time. However the increased flexibility created a blurred vision of employee status and now many employers and employees are quite unsure where they stand.

Now that we are post-recession, Vince Cable wants to ensure that “the fruits of recovery are shared by all” and that the flexible incentives which were only supposed to be temporary are not adopted as “commonplace”. In his view, happy, secure employees spend more money, which is good for the overall recovery of the economy.

From a legal perspective, we believe this review will not be an easy task. The casual contract has been a feature of UK employment law since long before the recession and it does serve a very valid purpose in some organisations. The recommendations from this review are expected to be ready for March 2015.

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