FRU has submitted a response to the government consultation on employment status that closed on June 1st. The consultation asked whether the options proposed in the Taylor Review of Modern Work Practices could achieve more certainty and clarity for businesses when determining employment status, particularly in relation to the realities of the modern labour market.
FRU’s main points were as follows:
The complexity of the legal position on employment status can assist employers who set out to deliberately miscategorise the status of their staff. But there are many other factors involved. In our experience the following factors are more important:
• Lack of scruple from employer. There are simply some rogue employers who have no interest in the legality of their actions.
• The worker’s knowledge of employment status. Many employees have no relevant knowledge or understanding of their status. In these circumstances, there is no need for the employer to rely on sophisticated obfuscation based on the sometimes nuanced legal position. They can put forward an obviously wrong assertion confident that it won’t be challenged.
• The power balance between worker and employer. Regardless of their knowledge, workers can only challenge their position if they have access to a genuine remedy or have the resources to push back against their employer. This is difficult for many vulnerable workers, particularly those in low paid, insecure jobs.
FRU submitted therefore that codification of the test for employment status is not likely to produce any significantly greater certainty than the current case law approach. The difficulty in determining employment status is not that it is difficult to identify the main principles — these have been clear for some time. The difficulty is in applying the principles to actual employment situations. Where there is factual disagreement as to what was actually agreed this needs to be resolved. But, even more significantly, many employment relationships are genuinely complex or atypical, and different factors point in different directions.
In FRU’s view many of the issues around employment status would be better addressed by ensuring that employees and workers have adequate access to advice and the opportunity to challenge suspect employment status decisions by their employer. We see many cases where employers insist that their staff are not employees or workers, even in straightforward cases where no sensible doubt exists.
We argue that greater state enforcement, such as through HMRC enforcement of the National Minimum Wage, would produce pressure on employers to get status issues right.
FRU Chief Executive David Abbott commented that “FRU represents hundreds of people in employment tribunals each year. We are very keen to ensure that our experience, and that of our clients, is fed back into the policy making process to prevent problems for other people. We wanted to contribute to this consultation on employment status because it forms the basis of many employment disputes and getting it right from the start can help often vulnerable workers”.