This was a question that the Jersey Employment Tribunal had to grapple with recently in a case involving a man who undertook the book keeping, some administration and banking tasks on a parttime basis for a restaurant for a period of nine years.
When the restaurant business directors decided to do the tasks the man had undertaken, he was given a month's notice. He worked this out but subsequently filed a JET1 claiming redundancy pay and an award for unfair dismissal. Only if his status was that of an employee would he be entitled to claim these, under Jersey's Employment Law.
Initially the man had indisputably been self-employed, but the position became less clear when some of the circumstances changed and a verbal agreement reached regarding the payment of his Social Security contributions by the business.
The man claimed he was an employee for the following reasons –
- he was given more than one contract of employment;
- he was paid holiday pay;
- for a period, he was listed as an employee on the business's Social Security return;
- he was entrusted with a set of keys to the restaurant and office, including to the safe;
- he had intimate knowledge of the workings of the business;
- he was included in the staff annual bonus scheme;
- he was invited to staff parties and staff meetings (although rarely attended);
- he issued himself with a payslip without recourse to the Directors.
The restaurant contended that the man was self-employed for various reasons including –
- he chose the hours he worked;
- he always took holidays when he wanted. He did not seek advance permission from the Directors to take time off;
- he worked for other businesses as well as for the restaurant;
- he did not do all the tasks that were asked of him;
- he did not receive sick pay when ill and did not have to provide a sick certificate;
- he had always been regarded as "freelance".
The Tribunal considered the four tests that have evolved over the years in such cases within the UK to determine whether an individual is an employee or not.
In this case, the Tribunal found it hard to reconcile some of the conflicting factors but concluded that the man was not an employee at the time the relationship ended, because he remained in control of his working environment. It was the degree of control, or rather the lack of control, by the employer that was the determining factor.
So, even if an individual is engaged by your business or organisation over a long period to provide some form of service and is very involved in the activities of the business, to avoid any confusion or dispute arising, they should never be issued with a contract of employment or terms and conditions of employment (although they many expect you to sign their terms and conditions or agreement of services) and no wage slips should be issued to them.
You would expect to pay the invoices they submit to the company/business for the provision of their services (which will include GST if the turnover of their business is above the threshold for this). By keeping the parameters of the relationship clear and defined, this should avoid any misunderstanding or any confusion by the parties or by any authority.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.