Working status and zero hours workers

16 August 2022

1. Employment legal status and employment tax status

Government has said that employment legal status and employment tax status won’t be aligned soon because, post pandemic, the time is not right and there is no consensus on how to do it.

Alignment of the statuses had been considered helpful because of the complexity and uncertainty their non-alignment creates for both employers and those working for them.

There are three employment legal statuses: employee, worker and self-employed with employees having more statutory legal rights -such as the right not to be unfairly dismissed. Workers and employees are entitled to working time and holiday pay protections, to be paid at least the national minimum wage and pension auto-enrolment.

However, there are only two employment tax statuses – employed and non-employed. Although the legal and tax status are assessed using similar factors, they can come to different results, and are applied with differing aims, causing confusion for employers. Unfortunately, no useful change is now planned by the government.

Instead, government has issued guidance for employers and workers on employment legal status and the rights that attach to each status. However, the guidance is very lengthy and should be treated as a place to start because every case will depend on its own facts and how the courts apply those facts when presented to them in a dispute.

2. Zero hours workers’ rights extension

The prohibition on zero hours workers working for another employer is being limited further for workers with a guaranteed income below or equivalent to the Lower Earnings Limit (currently £123 pw). The government will be introducing legislation which makes void and unenforceable any provision in a zero hours contract which prohibits a worker from either:

  • doing work or performing services for another under another contract or under any other arrangement; or
  • doing work or performing services under another contract or under any other arrangement without the employer's consent

Any worker dismissed or treated to their detriment for reasons related to the ban will be entitled to bring an employment tribunal claim.

3. The Future of Work Review

Matt Warman MP is leading a review into how the government can best support a thriving future UK labour market by assessing what the key questions to address on the future of work are as they look to support people to progress in work with the skills they need and to grow the economy.

He is looking at

  • the importance of place and local labour markets in creating and facilitating access to good jobs.
  • the role of automation and how quickly it is happening.
  • how government can build on the ‘good’ flexibility in our labour market and the gig economy, whilst ensuring sufficient protections are in place to prevent exploitative practices, and how this can be done in a way that encourages productivity and growth.

His report is to be delivered to the (current) Prime Minister and may shape employment legal rights policy going forward.

Employers planning the structure of their workforce and the use of casual workers and the self-employed alongside permanent employees should bear this kaleidoscope of potential changes in mind.

If you are an employer who requires support with employment legal structuring, employment legal rights or challenges to their enforcement, please contact Charlie Barnes.

Charlie Barnes
Charlie Barnes
Director, Head of Employment Legal Services
Charlie Barnes
Charlie Barnes
Director, Head of Employment Legal Services