A high-profile court case concerning the employment rights of people working for taxi company Uber is a prompt for farm businesses to check they are compliant with the latest employment law.
Farmers Weekly spoke to lawyer Natalie Ward from Thrings about the implications of the case for farmers.
Companies such as Uber, Deliveroo, and City Sprint have been hitting the headlines over the course of the past 18 months, as employment tribunals determine the employment status of their workforces – that is, whether they are employees, workers or self-employed.
In all these cases, the tribunals found the individuals who were seemingly engaged by those businesses on a self-employed basis were actually workers, and therefore entitled to greater entitlements and benefits than they were receiving.
Given many farm businesses tend to rely heavily on contractors and casual farm labour, rather than employees, these rulings have implications for the farming sector too.
Farmers need to be clear about the employment status of anyone working for them or they risk being hit with a hefty PAYE and national insurance tax bill and a raft of employment-related liabilities.
Self-employed or worker?
One of the critical questions farmers need to consider when deciding if someone is self-employed or a worker is the level of control they exercise over the person completing the work.
If you use a contractor, to do some hedgetrimming or relief milking, who is genuinely in business on their own account, and provides their services to other farms in the area, and invoices you, then they are likely to be self-employed and you can pay them gross.
Someone who is self-employed won’t be entitled to any other employment rights or protections.
However, casual farmworkers, such as seasonal fruit pickers and some contractors who are not genuinely in business on their own account are likely to fall into the category of a worker.
This means they are expected to perform the work required personally (not subcontract it out) and the relationship between you and them is not that of client and service provider, as would be the case with a self-employed contractor.
If they meet the definition of a worker then they need to be paid at least the national minimum wage, holiday pay and sick pay, and have tax and national insurance deducted – as would be the case for employees.
How can farmers protect themselves?
Farmers who are not sure of the status of the people who work for them should seek professional advice.
Once they are clear about the status of the person they are taking on, they should set out the terms of the engagement in writing, and ensure they are providing them with the correct entitlements.
For employees, it is a legal obligation to provide written terms and conditions but if issuing a contract seems unrealistic, it’s advisable simply to set out the terms and conditions of the engagement in a letter.
There’s no requirement to provide workers with a contract or written terms and conditions, but having something in writing does provide clarity.
Finally, and importantly, it is important to ensure the working relationship reflects and continues to reflect what has been agreed at the outset.
Although, farmers may prefer taking on self-employed contractors as this carries less responsibility, HMRC or any employment tribunal will look at the reality of the relationship at the time of the complaint, rather than the “label” put upon it at the beginning.
Other employment issues to watch
Working time regulations (WTR)
Workers and employees are permitted to opt out of the statutory 48-hour limit in order to work more than 48 hours a week, but employers should obtain a specific written agreement from the worker that he or she agrees to disapply that provision, and keep a copy of it.
If claims about the WTR or national minimum wage are brought in a court of law, the onus will be on the employer, and not the worker bringing the claim, to produce accurate records of working time.
If the employer can’t do that, the court is likely to side with the worker and the employer may face a criminal conviction or unlimited fine.
Case law has determined that holiday pay needs to reflect a worker’s normal remuneration (including overtime) over a representative period, rather than just their basic salary.
Employers have a duty to check the identity of their employees and their right to live and work in the UK prior to their employment starting.
Farmers who have failed to carry out the requisite checks could face imprisonment for up to five years if subsequently found to have employed someone illegally.