eleanor@eleanordeem.com
One of the subjects that has come up more often in my consultancy career than I ever dreamed it would is employment status. I had dealt with it before, but in the context of larger employers it came up much less frequently. Most people were employees and that was clear. The occasional agency worker or ‘temp’, but usually nothing too tricky.
But working in HR consultancy for SMEs, it became clear very early on that this was going to be a constant theme, and I have found myself advising on this many, many times, and the consultants I work with find exactly the same.
Employment status is something that is not determined by the parties in question, but by the reality of the situation – the nature of the relationship between the parties. What is written in a contract will have only a limited bearing on the decision either HMRC or an employment tribunal might make about the status of the person.
But I think part of the problem is terminology. We hear people talking about ‘contractors’ and ‘freelancers’ an awful lot. But in terms of the legalities of employment status, those are not terms with any standing or legal definition at all. There are usually only three possibilities for employment status – self-employed, casual worker, and employee. That’s it. And those categories have set rights.
So when someone starts talking about a ‘freelancer’ they have on their books, it is pretty meaningless, because a person they describe as a freelancer might, upon a bit of digging, turn out to be a casual worker, whereas someone else’s ‘freelancer’ could be a self-employed person. The same applies with ‘contractor’. Even within the same organisation, two ‘contractors’ might in reality have different employment statuses.
We hear these terms often from small business owners, and digging deep to find out what the real employment status is of these individuals, encouraging business owners to ensure contractual arrangements reflect reality, and guarding against ‘drift’ from one employment status to another, is something we do a lot.
But actually, HR professionals also use those terms a lot too. I’ll get asked by an HR professional a question about a ‘contractor’ they have, and before I can give any advice on how to handle the situation, I need to explore more about what’s actually happening, as my advice may differ completely if I feel there is a possibility the person has (or could claim to have) the status of an employee.
In fact ‘contractor’ frequently does mean someone on a fixed term employment contract, or who is doing a fixed term employed role but has not been given an employment contract.
I think as a profession we should really try to move away from terminology that is ambiguous or lacks an accepted defined meaning where it could make a significant difference to rights and obligations, and where one person’s understanding may differ from another’s even in the same conversation
