Presented at the NCVO National Volunteering Forum on the 1 July 2014 by Paul Jennings, Senior Associate, Bates Wells Braithwaite.
Covers employees, workers, self-employed and volunteers.
Find out more about NCVO's volunteering work: http://www.ivr.org.uk
2. Content
• Definitions (statutory and common law)
• Different statutory protections
• Recent case law
• Problem areas: zero hours contracts, interns, tax
• Case studies
• Q & A
6. Employee – statutory definition





An “employee” is “an individual who has entered into or works
under ... a contract of employment”.
“Contract of employment” means “a contract of service or
apprenticeship, whether express or implied, and (if it is express)
whether it is oral or in writing”.
Employment Rights Act 1996, s. 230(1) and (2)
7. Employee – common law tests





There are various tests:
•The control test
•The economic reality test
•The business integration test
•The multiple or multi-factorial test
10. Worker – statutory definition





A “worker” is “an individual who has entered into or works under (or,
where the employment has ceased, worked under) –
•A contract of employment, or
•Any other contract, whether express or implied and (if it is express)
whether oral or in writing, whereby the individual undertakes to do or
perform personally any work or services for another party to the contract
whose status is not by virtue of the contract that of a client or customer of
any profession or business undertaking carried on by the individual...”
Employment Rights Act 1996, s. 230(3)
11. Worker – common law interpretation





“The intention… is plainly to create an intermediate class of protected
worker, who is on the one hand not an employee but on the other hand
cannot in some narrower sense be regarded as carrying on a
business...”
“… the policy behind the inclusion of limb (b)… can only have been to
extend the benefits of protection to workers … who are viewed as liable
to be required to work excessive hours, to suffer unlawful deductions
from their earnings or to be paid too little… the purpose of the
Regulations is to extend protection to workers who are, substantively
and economically, in the same position…”
Byrne Brothers (Formwork) Ltd v Baird and others [2002] IRLR 96
13. The difference between employees and workers
• Worker status has a lower “pass mark”
• Fewer rights (e.g. unfair dismissal, redundancy payments etc.)
• Typically more transient/ less integrated
• Mutuality still exists – but with (limited) scope for substitution
• Still subordinate
18. Various Definitions





There is no universal or statutory definition:
"a person engaged in an activity which involves spending time, unpaid
(except for travel and other out of pocket expenses), doing something
which aims to benefit some third party…”
“… a specified period of time that a person spends with your
[organisation], during which they have an opportunity to learn directly
about working life and the working environment… placements offer
people the chance to try their hand at particular tasks, others simply
provide an opportunity to watch and learn. The nature, length and
arrangements … vary greatly."
19. Is there a contract?





To establish relevant employment protection an individual must first
establish that they have a contract with an organisation. This will require
existence of the four basic elements of a contract:
•Offer
•Acceptance
•Consideration
•Intention to create legal relations
The absence of a contract between an individual and an organisation will
be fatal to a claim under ERA 1996 or the EqA 2010
20. Murray v Newham Citizens Advice Bureau
• Murray applied to become a trainee voluntary advisor with the
Newham CAB
• Murray signed a document produced by CAB which contained a
number of obligations on his part (volunteering on specific days of the
week, at specific times and for a defined duration, completing training,
etc)
• The document also contained a number of obligations on CAB (to
provide training, support and pay expenses)
• The CAB then rejected Murray’s application, which prompted Murray
to bring a claim of disability discrimination against CAB
21. Murray v Newham Citizens Advice Bureau
• The Employment Tribunal found that the agreement did not come
within the definition of “employment”, citing the crucial factor as the
absence of pay and stating there were no obligations on either party
• The EAT found the Tribunal “not only plainly wrong but that it
manifestly contains errors of law”: the agreement did contain a
number of obligations and the absence of pay is not a crucial factor in
determining employment
• The EAT remitted the case to the Employment Tribunal to consider
“what actually happens” and to take a sensible view as to whether the
agreement fell within the definition of employment
22. X v Mid Sussex Citizens Advice Bureau & others





• X volunteered with the Mid Sussex Citizens Advice Bureau (CAB) for
4-5 hours per week
• She signed a "volunteer agreement", which stated that it was "binding
in honour only … and not a contract of employment or legally binding”
• When the CAB asked X to cease her volunteer work she sought to
bring a claim for discrimination
• However, an employment judge decided that the tribunal had no
jurisdiction to hear X's claim. This decision was upheld by the EAT,
the Court of Appeal and the Supreme Court
23. X v Mid Sussex Citizens Advice Bureau & others





• X did not have protection because she did not have a contract
• The Framework Directive is not unlimited in its scope and extent. It
confers carefully defined protection against discrimination in specified
circumstances
• It was clear from the legislative history of the Framework Directive
that it was not intended that Article 3(1)(a) should encompass
voluntary work
• The European Parliament had proposed an amendment to extend
Article 3(2)(a) to include "unpaid or voluntary work" but this was not
accepted by the Council
24. Practical tips





• Avoid making payments to volunteers that could be construed as
wages
• Payments to cover actual expenses should be clearly identified as
such and ideally reimbursed against receipts
• Remove or, at least, minimise perks that could be seen as
consideration
• Giving a volunteer the ability to refuse tasks and choose when to work
will point away from the existence of a binding contract
25. Practical tips





• Avoid using contractual language (“hopes and expectations”)
• Adopt flexible language, such as "usual" and "suggested” (see the
template provided)
• Keep arrangements under review – don’t let relationships evolve
unchecked
27. "Voluntary workers”





“Voluntary workers” - a category of worker who work for charities,
voluntary organisations, and statutory bodies.
Voluntary workers (as opposed to volunteers) are not entitled to the
NMW if the following conditions are met:
– They receive no monetary payment other than reimbursement of
expenses actually incurred or reasonably estimated as likely to have been
incurred in the performance of their duties
– They receive no benefit in kind other than reasonable subsistence or
accommodation (section 44(1)(b), NMWA 1998)
28. "Voluntary workers”





The government gives the following examples of expenses incurred in
the performance of a voluntary worker's duties:
•Travel to and from the place of volunteering and in the course of
volunteering
•Cost of care of dependents needed to enable the voluntary worker to do
the voluntary work
29. "Voluntary workers”





Training will not be considered a benefit in kind for NMW purposes if it is:
•Necessary to perform the duties of the voluntary worker
•For the sole or main purpose of improving the voluntary worker's ability
to do the work
•Necessarily acquired in the course of the voluntary work
31. Zero hours contracts
•Not legally defined so open to broad interpretation
•Subject of 2013 government consultation
•Contract for casual working with no guarantee of work
•The employee is only paid for work done
32. Zero hours contracts
Advantages
•Flexible (potentially, for both sides)
•It enables employers with fluctuating levels of work to operate
efficiently
•Employees maintain protection from unfair dismissal,
redundancy entitlement
•In practice (sometimes) employees have a say in their hours
33. Zero hours contracts
Disadvantages
•Perceived as (and often are) exploitative – some employees are
unable to work for other employers in between shifts and are
unable to turn down work if / when it is offered
•Unless work truly does fluctuate, ZHC are often myopic: they
invariably fail to inspire commitment / high standards /
consistency
•Alternative: a bank of casual workers?
35. Zero hours contracts
•PAYE?
•The Social Security (Categorisation of Earners) (Amendment)
Regulations
•The redrafted s.44 of the Income Tax (Earnings and Pensions)
Act 2003
•IR35