Why is it important to determine the employment status of your workforce, who can do this, and what is your risk as an employer?
Research from the National Centre for Social Research (NatCen) from February 2018 shows that 4.4% of the population of Great Britain worked in the gig economy in the last 12 months, amounting to some 2.8 million people. Companies like Deliveroo, Uber, Hermes and similar have blossomed over the last few years, creating working opportunities for those who want their next assignment to be an app and a click away. But while ways of working develop, it follows that the nature of how people are engaged by businesses is also changing shape, particularly with the introduction of new technology. The issue of employment status is therefore high on the political agenda and headline news in the media.
Companies should make sure they understand the differences that the different legal classifications of employment status bring.
Staff are all people in the business regardless of how or what they are labelled by the business. Staff may have the job status of employees, workers or self-employed. However, the correct legal status can only ultimately be decided by a court.
Labelling staff does not therefore give the business certainty of legal employment status. For example, a non-executive officer could be a consultant who is self-employed or a worker. A casual worker can be an employee, a worker or self-employed.
In order to best manage employment risk and liabilities, a business is advised to:
1. Categorise all people in the business into employees, workers and self-employed.
2. Assess whether staff who are currently employees need to and should have this status.
3. Assess whether staff who are workers or self-employed create a risk to the company.
4. Quantify and take steps to manage or mitigate the risk and its value.
In order to manage any financial risk, businesses need to quantify value. The key financial risks which businesses need to consider are:
1. Holiday pay for 6 years
2. Tax/penalties
At TandonHildebrand our team of experts are regularly assisting businesses by quantifying and valuing their risk. For more information contact Tania Tandon on +447731489863 or on tania@tandonhildebrand.com.
