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The Complications of Employment Status

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The Complications of Employment Status

Employment status cases have become increasingly common given how blurred the lines have become between employee, worker, and self-employed in the light of gig economy cases.

Increasingly, professional consultants are also starting to bring these claims and it is perfectly possible that someone operating under the traditional “consultant” model may acquire worker status depending on the circumstances.

In this article, Chris Dobbs looks at the complexity of worker status specifically in the case of Mr A Guler v Newman Law LLP.

Mr A Guler v Newman Law LLP

Mr Ahmet Guler was engaged by a firm to attract a potential new Turkish client base and their business. Mr Guler alleged that the nature and structure of his engagement meant that rather than a self-employed consultant he was functionally an employee and therefore had the associated rights.

The status of employee is the most regulated of the potential employment statuses and there is a fairly high burden on an individual to prove that they were actually an employee. The law requires a contract that is akin to an employment contract whether in writing or verbal in nature.

Mr Guler claimed he had been offered an arrangement of £2000 per month plus 40% commission with the firm denying this and saying he was only offered the commission-based remuneration for clients whose business he attracted.

What did the Employment Tribunal decide?

The employment tribunal agreed with the firm especially as they were able to produce evidence that paralegals, who Mr Guler compared himself to, were on salaries of approximately £20,000 per annum but did not receive commission.

Other consultants at the firm were on commission schemes but not with guaranteed salaries. The tribunal, in consideration of other evidence, was therefore satisfied that the claimant was not an employee.

It did, however, find that he was a worker of the firm. The tribunal ruled that the contract which existed was to contract services for the claimant to provide individually and that there was a sufficient degree of control exercised by the firm over how and when those services were provided by the claimant.

The tribunal also noted the significant degree of integration of the claimant into the respondent’s business such as the use of a firm e-mail address and phone number.

Having been found as a worker, the claimant was entitled to bring unauthorised deductions claims and was awarded a nominal sum for this. The determination will also entitle him in the future two other protections and benefits afforded to workers under UK law.

What are the takeaways for employers?

Chris Dobbs, Employment Associate, said: “The important takeaway from this is for professional service businesses who engage individuals on what is ostensibly A consultancy basis.

Much like with the gig economy, calling someone a consultant does not necessarily mean that they are or that the legal relationship will be determined accordingly. The employment tribunal, as in the cases of Uber for example, will look beyond contractual terminology to determine the actual working relationship.

If the various tests of worker status are met, then an individual can be deemed a worker and will have accrued the associated rights during their service.”

Related: The legal implications of recruitment that employers need to know

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