How to…keep up with employment law

It can be a minefield – get employment law wrong and there is the risk of costly tribunals and hefty fines or worse. This is an area where preparation can pay dividends, protecting against disputes or HM Revenue & Customs investigations.

Employed or self-employed?

The most common mistake made in farming is whether workers are employed or self-employed, says Kate Gardner (pictured below), partner at solicitor Clarke Willmott. “Different types of workers are entitled to different employment rights, so it is important to distinguish what type of workers you have.”

Kate-Gardner,-for-BizEmployees have far greater rights, including protection against unfair dismissal, the right to redundancy pay, and to be transferred on the sale of a business. But it is important not to rely on a simple description of a worker – someone who claims to be self-employed may actually be employed in the eyes of the law.

“A worker’s status will depend on the mutuality of obligation between the parties – is there an obligation on the employer to provide work and pay for work done, and is the employee obliged to do that work?”

In determining whether a worker is self-employed or employed, how they are paid and whether they are expected to work certain hours or obliged to provide their own cover in case of holiday or sickness will also be issues.

For example, in the case of Newnham Farms Ltd v Powell, Mrs Powell worked fewer than eight hours a week in the office, and was paid £2,000 a year to reduce her husband’s tax liability.

When the couple separated, the court ruled she was actually employed, and was awarded back pay to the Agricultural Wages Board minimum, redundancy pay and unfair dismissal compensation. “It is worth getting the employment status of all your workers right from the very beginning,” says Mrs Gardner.

Casual workers

Casual and seasonal workers are rarely classed as employed because of the lack of mutual obligation. However, they are still entitled to paid holiday, the national minimum wage, maternity, paternity and adoption pay (but not leave), and may not be discriminated against.

Seasonal workers may be considered employees if what is known as an umbrella contract exists, where it is the practice that they are taken on in subsequent seasons.

Gangmaster rules

Where workers are provided through an agency, they will fall under the Gangmasters Licensing Act, warns Clarke Willmott partner Tim Hayden. “The supply of labour in agriculture, forestry, food processing and catering, and shellfish industries is regulated. It is an offence to supply without a licence, or to enter into arrangements with an unlicensed supplier.”

Contrary to popular belief, the GLA does not just apply to foreign unskilled labour – it also covers UK nationals, any skilled, senior and single workers, including a farmer’s own labour in some cases.

“If you buy a neighbour’s crop and send your own workers to cut it, then under the gangmaster regulations you are technically required to hold a gangmaster’s licence, although I know of no cases where prosecution has been brought.”

The many exemptions from the regulations include temporary supply between farmers, family members, skilled workers if employed, and contract work where the contractor supplies their own machinery.

Where labour is provided through a gangmaster, the employer must pay the minimum wage. Fines may also be levied and serious cases can lead to imprisonment for up to 10 years. In addition to the penalties, claims can be made under the Proceeds of Crime Act in order to recover any benefit derived by farmers if workers have been underpaid. The principal claim would be against the labour provider.

“You really need to do your due diligence before taking on any agency labour – check on the GLA website that the agency has a licence before accepting a worker. And if you do find yourself in alleged breach of permit, don’t admit anything until you’ve taken professional advice, because your original explanation may be central to your case.”

Farm accommodation

Often, farm workers are provided with accommodation, but care should be taken not to create security of tenure, warns Mrs Gardner. For example, a farmer might provide a cottage to a worker they consider to be self-employed, and deduct the rent from his earnings.

But if at a later stage they seek to end the contract, and HMRC or an employment tribunal determines the person was actually employed, the farmer may be liable to pay redundancy pay, unfair dismissal compensation, and unlawful deduction of wages (under the Agricultural Wages Order employers may only deduct £1.50 a week from the worker’s minimum wage for accommodation). The worker may also be entitled to security of tenure on the cottage for life if they are found to be employed as an agricultural worker.

Unfair dismissal

  • Recent changes to legislation mean it is now easier for workers to claim unfair dismissal

  • If that includes an element of discrimination the fines are now unlimited

  • Employees with more than one year’s continuous service before 5 April 2012 have a right not to be unfairly dismissed

  • Those commencing employment after that date must have two years’ service, and employers must follow fair procedures

  • But – no minimum qualifying period of service where disability discrimination is involved.

  • From April 2011, employees cannot be dismissed fairly for being at retirement age. “If you have a problem with aging workers you need to think long and hard about the procedure for dismissing them,” says Mrs Gardner. Reasons for fair dismissal include redundancy, incapability or ill health, conduct, or by agreement.


 Most legislative changes take effect in April each year – April 2012 saw:

  • Changes aimed at reducing spurious claims to Employment Tribunals

  • Two-year qualifying period for claiming unfair dismissal introduced

  • New statutory sick pay, maternity and paternity pay rates

There will be new minimum wage rates from October

In future, expect more changes aimed at improving the right to work flexibly and increasing parental leave

Sick pay and maternity leave 

 Anyone employed continuously by the same employer for 52 weeks is entitled to sick pay of at least minimum wage, providing they tell the employer about the sickness. However, if the injuries occur outside work, or while travelling to and from work, the employee may only be eligible for sick pay at statutory rates rather than that provided for by the AWO.

Recent changes mean that employees are also entitled to six months’ paid paternity or maternity leave. If the mother goes back to work without having taken the full six months, the father is entitled to the remainder of that paid leave, even if they work for different businesses.

Long-term sickness can cause particular problems which can be exacerbated where the sick worker occupies farm accommodation which is needed by the temporary/replacement farm worker, advises colleague Ruth Le Page. “It is possible to dismiss fairly in cases of long-term sickness particularly where it can be demonstrated that there is a pressing need to replace the worker so that the work can be carried out. However it must be handled very carefully, following the correct procedures.”

Agricultural worker or not?

Both pay and conditions including accommodation rights are affected by whether a worker is an agricultural worker or not so it is important to establish the status of workers.

For example, gamekeepers and grooms are not generally considered agricultural workers under the AWO, but if they split their duties between gamekeeping or horses and agricultural work, then this will give them agricultural worker status, even if the agricultural work is a minor part of their work, explains Miss Le Page.


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