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Rights of contract workers

Written by: Claire Brandon
Published on: 19 Nov 2012

Working on a contract basis offers exciting opportunities for those in the finance sector, including increased flexibility, earnings and variety of work. But, this comes with the sacrifice of many protections afforded to those working as employees. Contract workers do have some employment law rights, although this is a complex and sometimes confusing area.

Calling yourself a ‘contract worker’ or ‘contractor’ has little significance for employment law purposes. What matters is the nature of your role and relationship with the business you work for; and whether you are classified as self-employed, a worker, or an employee.


Being self-employed

Most contract workers consider themselves self-employed. This has no concrete legal definition and depends on the individual circumstances. The main factor determining whether you are self-employed is whether you can hire someone else to do the work for you. Also relevant are whether you work without supervision, submit invoices and pay your own tax, have to redo unsatisfactory work in your own time, and can provide services to different clients. These all point to being self-employed.

If you are self-employed your rights regarding remuneration and working conditions, for example, depend on what has been agreed with your client. If necessary you can take legal action for breach of contract to defend these rights. In addition, you are protected by health and safety (if working in your employer’s office) and data protection law, and from discrimination under the Equality Act if you contract to do work personally.


Workers and employees

So what if you are nominally a contract worker but do not fit the description of a self-employed person described above? In most cases you would be classified as a ‘worker’, but might be considered an employee if:

 a) You have to do the work yourself.

 b) The business controls the work you do.

 c) While your relationship continues, the business is obliged to give you work and you must do it.

As a worker you have the health and safety, discrimination, and data protection rights enjoyed by the self-employed. In addition, you are protected by the National Minimum Wage Act 1998 and the Working Time Regulations 1999. Employees benefit from all these plus many other rights like paternity and maternity leave, protection from unfair dismissal, redundancy rights and a notice period.

If you work through an agency and are paid by them the situation is slightly different. This is because, unless you are self-employed, the Agency Workers Regulations 2010 apply. This means that when on assignment you have the same rights regarding pay and working time as if you were working directly for the client in question. There is an exception to the requirement regarding pay when you have a permanent employment contract with the agency and are paid between assignments (this is called the ‘Swedish derogation’).

If you have problems or concerns regarding your rights as a contractor it is normally best to discuss this with your agency or client informally. If you need further assistance, you could consult Acas (the Advisory, Conciliation and Arbitration Service) who can help resolve workplace disputes. If you have a serious problem or are considering taking legal action it is highly advisable to consult an employment solicitor.