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When is an employee not an employee?

You’d think it was simple. It’s not. All employees are workers but not all workers are employees. With the rise of the gig-economy the question has taken on a most important position in the minds of both companies, and those who would classically consider themselves to be self-employed.

The acid test for employee status has two elements. Mutuality of obligation and control. The first rests on an employer providing work for a person in return for a wage according to terms and conditions that are in the control of the employer. The second, is when the employer can determine when, where and how the work is done.

This doesn’t clear the issue, as shown by the recent case heard in the Supreme Court for Gary Smith against Pimlico Plumbers. It really is down to a case by case basis at the moment. The Taylor Report offered a way out, with the potential creation of a third type of worker, a ‘dependent contractor’.

It really is a bit of a mess. If you’re in the business of ‘employing’ contractors it’s well worth ensuring that you’re paying them the right amount, and that you’re offering the correct amount of benefits. And are you and they paying the right amount of tax?