Government proposes law change to clarify employee and contractor status…

The Government has announced that it will introduce an amendment to employment law to clarify the legal test for determining whether a worker is an employee or a contractor.

The new law includes a threshold test in which all four criteria must be met for a worker to be considered a contractor.

The criteria are:

• there is a written agreement specifying the worker is an independent contractor;
• the business does not restrict the worker from working for another business (including any competitors);
• the business does not require the worker to be available on specific times of day or days, or for a minimum number of hours, or that the worker cannot sub-contract the work; and
• the business does not terminate the contract if the worker does not accept an additional task or engagement.

If one or more of the above criteria are not met, the current legal test for determining the employment arrangement will apply.

This test looks at the intention of the parties and the true nature of the employment arrangement, rather than whether the contract between the parties defines the worker as a contractor or employee.

The Government has stated that the new test will provide a degree of certainty for businesses and workers.

This amendment comes in the wake of the recent Court of Appeal case which held that Uber drivers were employees. The decision has the potential for workers in similar industries operating through digital platforms to challenge their employment status in the courts. The Government’s law change will limit such challenges.

The new law is expected to come into effect next year.

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Alan Knowsley and Hanifa Kodirova