Whether you are a young business looking to hire the best talent or a fresh-faced graduate entering the workforce for the first time working out whether you are an employee or contractor is essential.
Employment status will determine how you are taxed, your job role and a variety of other factors in your working life. But how can you tell what type of contract you are under if it not readily apparent? Keep reading to find out.
What does the Law say the differences are?
The official definition of a workers status in the employment law states that an independent contractor works under a contract for services whilst an employee works under a contract of service. This is an example of how the subtle differences in legal phrases can make all the difference.
The Tests to Apply
When a law firm is attempting to determine whether an individual is an employee or contractor they use tests and evaluate them against each other. Whilst no test is definitive they can act as a good indicator for you or your organisation.
Mutuality of Obligation
This is a fairly complex legal term for a fairly simple concept. Essentially this test seeks to determine whether one party is obliged to offer the other work. In a contract of service, the employee would be obliged to accept the work that the employer is obliged to give whilst under a contract for services the contractor is not obliged to accept the work nor is the business obliged to provide it.
This is one of the most used tests on employment status in employment law. An in-house employment lawyer would most likely go to this first in an attempt to work out employment status.
Opportunity to Profit
This simple test is often used in conjunction with others to provide a well-rounded view of employment status. Essentially if you have the ability to increase your ‘profit’ from work that’s done efficiently this will point towards self-employment. Contrastingly if you are paid a standard rate and can only profit under a bonus or incentive scheme you are likely to be considered an employee.
Provision of Own Equipment
This test concerns the ownership of the equipment used in the workplace. An example might be a designer that uses their own laptop or a plumber using their own equipment. Both would point an employment lawyer towards determining contractor status. Contrastingly an office worker who does not own the computer they work on would be indicative of a contract of employment.
Find Expert Legal Advice if you are in an Employment Status Dispute
As shown employment status is a difficult subject to traverse as there are many different tests associated with it yet none are definitive in any given way. This is where you should seek out the services of an employment lawyer to ensure you have all bases covered.
The experts at Halebury offer a variety of legal services with many satisfied customers. Get in contact today to determine your employment status.