The Three Types of Employment Status

FEATURE threeThe types of employment status

Sarah Buxton* is a dental specialist employment solicitor who acts for dental practice owners, practitioners and managers up and down the country. Here, Sarah tells BDJ Team readers everything they need to know about employment status.

here are three types of or implied by the nature of the relationship. Worker status employment status: employee, Within a dental practice these tend to be the Worker status is sometimes seen as a worker and self-employed. practice manager, dental nurses, or cleaner. To ‘half-way house’ between employee and The three are often not in have employee status: self-employed status. Workers are entitled practice used correctly and the  An individual must be obliged to do the to fewer statutory rights than employees, difference is not always known. work personally (rather than being able to but do have some key legal rights, including: T send a substitute/locum)  Protection from discrimination Employee status  The employer needs to be obliged to  Protection against unlawful deduction An employee is an individual who has entered provide the work and the employee is from wages into or works (or worked) under the terms obliged to accept the work  Entitlement to the national of a contract of employment. The contract  The employer needs to have some control minimum wage. can be expressly agreed (in writing or orally) over the way the employee carries out work. ©hamburguesaconqueso/iStock/Thinkstock

‘AN EMPLOYER MUST TAKE OUT EMPLOYER’S Tax An employer is responsible for deducting LIABILITY INSURANCE TO COVER THE RISK OF tax and national insurance at source (PAYE) from the salary paid to employees. Self- EMPLOYEES INJURING THEMSELVES AT WORK’ employed individuals are responsible for paying their own tax and national insurance under self-assessment. Self-employed status INTEGRATION – A self-employed The self-employed enjoy no statutory individual should not be integrated into the Insurance employment rights (although they may dental practice. They should not perform An employer must take out employer’s be protected by discrimination law). Self- similar services to those performed by liability insurance to cover the risk of employed persons within a dental practice employees. For those practices where there employees injuring themselves at work. Self- generally include the dental associates, and is a self-employed hygienist and, at the same employed contractors are unlikely to be more often than not, the hygienists and practice there are employed hygienists, it covered by this type of insurance. therapists. To be truly self-employed the is more than likely that the self-employed Courts and HMRC will consider a number hygienist will also be classed as employed Liability of factors: and therefore practices which are run in this An employer is liable for acts done by an WRITTEN AGREEMENT – Without a way, are at high risk of there being a claim by employee in the course of their employment. written agreement in place, it is likely that HMRC and/or at the Employment Tribunal. This type of liability is unlikely to extend to an Employment Tribunal will decide that an FACILITIES AND EQUIPMENT – A self- self-employed persons. individual is an employee. For the individual, employed person should provide their own the plus side to being an employee means equipment and materials in order to perform Legal status of volunteers that they can benefit from various protections the services. The legal status of volunteers is not clear cut, contained in the employment legislation such FINANCIAL RISK – A self-employed as there is a vast range of different types of as the right not to be unfairly dismissed. This person should be personally responsible relationships, from the purely voluntary to means that if an individual has worked at for any losses arising from their work. The those that are clearly contractual and those the same practice for more than two years self-employed person should be required to in between, which are difficult to define. This and they are served notice to terminate their correct any unsatisfactory work in their own ambiguity makes it difficult for organisations services, they may have a claim for unfair time and at their own expense. taking on volunteers to appreciate any legal dismissal for which you can currently be TAXATION – All self-employed individuals obligations that they may owe them. awarded up to £74,200 in compensation. should be responsible for payment of their This course of action is not open to self- own income tax and National Insurance MYTH Having a contract provides employed staff. Contributions (NICs). Furthermore, there more flexibility CONTROL – A self-employed person should always be a tax indemnity clause within should be able to determine when and how the agreement, so that if HMRC ever decided It doesn’t, it only provides for more they work, this includes the days, hours, and that the ‘self-employed’ person was really in ambiguity. holiday entitlements. practice and an employee and therefore the MYTH I can deduct monies from an MUTUAL OBLIGATIONS – A self- practice owner had to pay back any tax, NICs employee’s wage without a contract employed individual shouldn’t be obliged including penalties, this payment can in turn You need to have the employee’s to accept the work which is offered and the be passed to the ‘self-employed’ individual. authority to do so which would be dental practice should not be under any best to be in writing, in the Contract obligation to offer work on a regular basis. What is the significance of of Employment. PERSONAL SERVICE – There should be the distinction? MYTH You don’t have to pay workers no obligation for the services to be carried Legal protections annual leave out personally and there should always be the Some core legal protections only apply to right to appoint a locum. employees, for example the right: Workers are entitled to be paid any EXCLUSIVITY – Associates and hygienists/  Not to be unfairly dismissed accrued but untaken holiday pay. therapists should have flexibility as to where  To receive a statutory they can work and should be able to work at redundancy payment. more than one practice. *Sarah has a number of years’ experience in PAY AND BENEFITS – With regards to Health and safety this specialist field and works in the Dental payment, the most concerning factor which Employers owe employees statutory health Team at LCF Law which offers an array of is often used in practice is when hygienists/ and safety protection. Self-employed services including buying and selling practices, therapists are paid an hourly rate and can individuals may not be covered under these expense share, partnership and shareholders often be paid, even when they are not duties, although they will be covered under an agreements, incorporations, employment & attending any patients. Most self-employed employer’s occupier’s liability. HR, associate agreements, NHS disputes and individuals should be paid a percentage of regulatory issues. the work they do and hence the payment Sales/Purchasers Please contact 0113 2010407 or sbuxton@lcf. can be variable. Further, they should not be Only employees will be automatically co.uk for further information. participating in benefit schemes and should transferred to any purchaser of the not be paid overtime. employer’s business. bdjteam2015124