The Employment Status ofIndividuals in Non-standard

Employment

Brendan Burchell,* Simon Deakin** and Sheila Honey***

* Faculty of Social and Political Sciences and ESRC Centre forBusiness Research, University of Cambridge

** Faculty of Law and ESRC Centre for Business Research,University of Cambridge

*** Department of Trade and Industry

March 1999

Acknowledgments

We wish to acknowledge with thanks the assistance and advice of a number ofcolleagues in the completion of the work for this report. For the DTI, Mark Cully andPaul Teasdale, provided much helpful advice and comment thoughout the project.For the Cambridge team, Roy Mankelow, Ines Wichert and Frank Wilkinson eachplayed a major part in planning the qualitative stage of the research and in carryingout the interviews and focus groups. Laura Scamponi also carried out a number of theinterviews and, with Stephanie Auge, assisted in the analysis of the interviewtranscripts. Hilary Taylor took part in organising and running the focus groups.Catherine Barnard gave advice on the legal assessments of employment status. Wewould also like to thank Bernard Casey of the LSE for his comments on an earlierdraft of the report.

Contents

Executive Summary i

Chapter 1. Introduction 1

1.1 Employment status and 'non-standard' work 11.2 Extending employment legislation: the concept of 'worker' 21.3 Practical implications of employment status 21.4 Aims and objectives of the research 31.5 Methods 3

Chapter 2. The Law Governing the Classification of EmploymentRelationships

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2.1 The four common law tests of employee status 52.2 Factors taken into account by the courts 102.3 ‘False’ self-employment 122.4 Mutuality of obligation and continuity of employment 132.5 Fixed term employment, employment for a specific task, and contracting

out of employment protection legislation15

2.6 Legislative extensions to the categories of protected workers 162.7 A note on terminology 182.8 Conclusion 20

Chapter 3. The Quantitative Wave: Aims, Methods and Main Findings 20

3.1 Introduction 203.2 Background 203.3 Methods 24 3.4 Economic Activity of Sample 26 3.5 Comparisons with the Labour Force Survey 27 3.6 Perceptions of status 27 3.7 Self-employment 30 3.8 In non-standard work? 30 3.9 Conclusion 35

Chapter 4. Clarifying Employment Status: Quantitative Analysis 36 4.1 Clarifying employment status 36 4.2 Common law tests of employment status 384.3 Estimating Numbers of ‘Workers’ 434.4 Qualifying for employment protection rights on the basis of continuity of

employment47

4.5 Reasons for working in non-standard arrangements 484.6 Conclusions 48

Chapter 5. The Qualitative Wave: Aims and Methods 50

5.1 Aims of the in-depth interviews 505.2 Achieving the sample for in-depth interviews 515.3 Data Analysis 525.4 Characteristics of the sample 535.5 Filters for ‘non-standard’ employment 555.6 Test-retest reliability of the dependency questions 575.7 Conclusions 60

Chapter 6. Employment Status in Practice: Findings of the ‘QualitativeWave’

62

6.1 Assessments of employment status 626.2 Cases classed as ‘unclear’ by the quantitative analysis but classified

clearly by the qualitative analysis68

6.3 Cases classed as ‘borderline’ by the qualitative analysis 706.4 ‘Clear’ discrepancies 746.5 Identifying the sources of uncertainty in the application of the legal tests

of status75

6.6 Conclusion 76

Chapter 7. Employment Status and the Experience of Non-standard Work 78

7.1 Reasons for choosing particular forms of employment 787.2 Advantages and disadvantages of forms of employment: perceptions of

autonomy and control79

7.3 Advantages and disadvantages of forms of employment: perceptions ofinsecurity and risk

81

7.4 Making explicit ‘trade-offs’ between employment and self-employment 837.5 Conclusion 84

Chapter 8. Conclusions 86

8.1 The coverage of employment protection legislation 868.2 Estimating numbers employed as ‘employees’ and ‘workers’ in Great

Britain86

8.3 Verifying the survey 878.4 Identifying sources of uncertainty in the application of legal tests of

status88

8.5 Employment status and the experience of non-standard work 88

Bibliography 90

Appendix 1 Glossary of Terms 91

Appendix 2 Questionnaire used in Quantitative Wave 93

Appendix 3 Aide mémoire for individual interviews 98

Appendix 4 Codes for the categorisation of information from the intervieweetranscripts

103

i

Executive Summary

Background

This paper reports the findings of an empirical study into the operation of lawsgoverning the classification of employment relationships. Access to employmentrights depends to a large extent on whether an individual is employed as an employee.The self-employed and a number of other groups (such as agency workers) tend tofind themselves excluded from employment protection law. The research was aimedat discovering how laws relating to the 'status' of employees and the self-employedwork in practice.

The research was prompted by a number of concerns relating to the present law.Firstly, the criteria by which the courts and employment tribunals distinguishemployees from the self-employed are perceived to be uncertain in their effects.Secondly, there is concern that the existing classifications fail to reflect the growth ofcertain flexible or non-standard forms of employment, in particular casual work, zerohours contracts, fixed term and task employment and freelancing.

One possible policy response to these concerns would be to reform the definitionscurrently in use in employment law. In particular, greater use might be made of thelegal concept of 'worker', which is wider than that of 'employee'. Some self-employedindividuals who are not in business on their own account and who contract to providetheir personal services to another would come under the definition of 'worker'. These'dependent self-employed' are among the principal groups whose employment statusis currently in doubt.

Objectives

The principal objectives of the research were: to identify the numbers of individualsin the employed labour force who are employed under various working arrangements(employees, 'workers', and the self-employed); to estimate of the number ofindividuals who might be affected by the wider adoption of the concept of 'worker' inemployment law; to identify the sources of uncertainty in the application of the legaltests of employment status; to examine the reasons individuals work in non-standardforms of employment, the nature of the choices made and the constraints on thosechoices, and the perceived costs and benefits to individuals of working underparticular arrangements with uncertain legal status; and to compare the survey resultswith those of the Labour Force Survey (LFS) and to attempt to develop a set ofquestions which could be included in the LFS in future for the purpose of obtainingmore reliable information on the operation, in practice, of the law relating toemployment status.

Methods

A two-fold methodology was adopted. Firstly, a quantitative study was undertakenbased on a representative sample of just over 4,000 members of the workforce inGreat Britain (the 'quantitative wave'). After an initial screening to exclude those whoappeared to be unambiguously employees or self-employed, approximately 1,200individuals were asked a range of questions about the nature of their employmentrelationships.

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Secondly, a small sub-sample of respondents were revisited in order to gather morein-depth information in less structured discussions, and to analyse their writtencontracts of employment or terms and conditions of employment. Qualitative case-studies were compiled using a mix of focus groups and individual semi-structuredinterviews, with the sub-sample of respondents, 36 of whom were interviewed face-to-face and 24 by telephone (the 'qualitative wave').

The Quantitative Wave

The quantitative analysis provided two forms of evidence on employment status:respondents' assessment of their own status, and secondly an assessment based ontheir answers to questions which were designed to reproduce the types of factorswhich were relevant to the classification of employment relationships by courts andemployment tribunals.

It was found that 86 per cent of those surveyed perceived themselves to be employeesand 13 per cent saw themselves as self-employed. An initial set of questions askedrespondents about the nature of their work in such a way to identify individuals whowere likely to have ambiguous status. On the basis of replies to these questions, it wasestimated that 30 per cent of those in employment had an employment status that, onfirst inspection, had elements of uncertainty and was not completely clear. They weremade up of two groups: those defining themselves as self-employed, but who werenot directors or partners in their own business, and who did not employ others; andthose defining themselves as employees who had some type of non-standard workingpattern or classified their jobs as non-permanent.

An estimate of the number of 'workers' in the workforce was then obtained by usinganswers to a combination of questions based on the legal tests underlying the 'worker'concept. It was found that the proportion of all those in employment who could beregarded as 'workers' varied from 80 per cent to 92 per cent depending on how thoseindividuals whose status was particularly unclear would be categorised at a tribunal.Similarly, the group of 'independent self-employed' could account for between around7 per cent and 19 per cent of those in employment.

This suggests that by using the 'worker' definition, the number covered byemployment rights might be higher than the 87 per cent who believe that they areemployees according to the LFS. The use of the worker definition might protect up toa further 5 per cent of all those in employment (or about 16 per cent of those whoseemployment status is unclear because they are employed in non-standard work ofsome kind). It is not possible to be more precise about the numbers who would beaffected by this change because of the difficulties of attempting to assess employmentstatus without examining each case individually.

The Qualitative Wave

The qualitative wave was used initially to assess the validity of the findings from thequantitative wave and to evaluate the effectiveness of the questions used. It was foundthat a number of respondents had not followed the exact definitions given during thequantitative wave. It is possible that better survey items might be developed whichwould be more reliable in testing for employment status. However, it seems that a

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large part of the unreliability of these questions is caused by the inherently complexnature of the economic relationships which they are attempting to describe.

Overall, findings from both waves of the research suggest that, given the normal LFSdefinitions of atypical or non-standard work and the current routing of the questions,the numbers employed in some groups may be overestimated - for example seasonalworkers - while others may be greatly underestimated - for example the numberemployed on fixed term contracts.

Evidence from the qualitative analysis shows that the one of the main causes ofuncertainty in the application of the tests for identifying an 'employee' is the legal testof 'mutuality of obligation'. The test causes particular uncertainty for casual workersand workers on zero-hours contracts.

Further uncertainty derives from the widespread use by employers of contractualdocumentation containing 'waiver' or 'relabelling' clauses which purport to determineemployment status. Contractual documentation, in particular for agency workers, alsoreflects attempts to draft terms and conditions in such a way as to minimise thelikelihood that a court would find that the individual was employed as an employee('status-denying clauses').

The case studies suggest that while individuals in non-standard employment exercisea significant degree of choice over the form of their employment, several factors arewidely perceived as conditioning that choice: these include the need to fit in withfamily arrangements; the costs of retraining following time spent out of full-timework; the time and complexity of setting up a business; discrimination by reference toage, gender and disability; and the lack of availability of regular work.

The research also suggests that the legal division between employment and self-employment does not correspond to perceptions of a clear divide between thesedifferent forms of work on the part of many individuals in non-standard employment.

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Chapter 1. Introduction

1.1 Employment status and 'non-standard' work

The issue of 'employment status' is centrally important to the administration andimplementation of employment law. The classification of workers according towhether they are employees, who are employed under a contract of employment, orindependent or self-employed workers, who may work under a contract for services orone of a number of other arrangements, determines, at an initial level, the applicationof rights and obligations under legislation concerning employment protection, socialsecurity, and taxation (Deakin and Morris, 1998: ch. 3). However, a high degree ofuncertainty attaches to the legal criteria by which workers are classified. This meansthat the effectiveness of the law, in practice, may be called into question.

Moreover, there is a perception that the existing classifications have become too rigidto deal effectively with the growth of non-standard forms of employment, that is tosay, those forms of work which depart from the model of the 'permanent' orindeterminate employment relationship constructed around a full-time, continuousworking week. The result is said to be the exclusion of certain groups of workers,whose status is unclear, from the protection of employment legislation (Hepple, 1986;Leighton, 1986; Deakin, 1986, 1988; Collins, 1990).

These questions have been the subject of numerous legal and policy-orientatedanalyses over the past 20 years. From sociological and economic perspectives, a largenumber of studies of labour-use strategies have examined employers' reasons forusing flexible forms of work (e.g. Atkinson, 1985; Pollert 1988; Wood, 1989, Hakim,1990; McGregor & Sproull, 1991, Hunter et al., 1993; Beatson, 1995; Rubery andWilkinson, 1995; Casey et al., 1997). Aside from the work of Leighton (1983, 1984),very few empirical studies have directly addressed the impact of legal classificationson the form in which labour is contracted. This report presents findings from aquantitative and qualitative study of the operation in practice of the rules relating toemployment status, with the focus on the perceptions and experiences of individualswhose employment is, in some respect, 'flexible' or 'non-standard'.

1.2 Extending employment legislation: the concept of 'worker'

One possible means of increasing the number of individuals covered by employmentlaw is to use the broader definition of 'worker' in preference to that of 'employee' as abasis for determining the scope of protective legislation. This would have the effectof including certain individuals who do not have a contract of employment, but whonevertheless contract to supply their own personal services to the employer and whoto some degree are economically dependent on the employer's business, that is to say,they derive a high proportion of their income from this particular employment. Thiswider definition of dependent labour is used for the purposes of equal treatmentlegislation and legislation concerning the payment of wages, as well as for certainlimited purposes related to employment protection legislation; it has also recentlybeen adopted under the National Minimum Wage Act 1998 and under regulationsimplementing the Working Time Directive.

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Notwithstanding the growing adoption in legislation of the concept of the 'worker',many aspects of its use remain unclear. In contrast to the voluminous body of case-law which exists on the question of the distinction between an 'employee' and a self-employed worker, there are very few decisions on the distinction between a dependent'worker' and a genuinely independent self-employed individual. It is not entirely clearwhich criteria the courts will apply in determining where this line is to be drawn, norhow they will weigh competing factors in the balance (as they currently have to dowhen applying the tests of 'employee' status). Partly for this reason, and partlybecause of a lack of empirical research on this question, it is not known how manyindividuals would be affected by an extension of employment protection rights to'workers' as opposed to 'employees'.

1.3 Practical implications of employment status

The difficulties associated with defining employees, workers and the self-employed,and the problems of assigning status to those in non-standard work, have a number ofpractical implications for the operation of the law in practice.

· While some degree of uncertainty in the operation of the law in this area isprobably unavoidable, a situation in which a substantial proportion of the workforce isunsure as to its legal position would give rise to concern.

· In particular, the ambiguities surrounding the distinction between employeesand self-employed mean that there may be many individuals who have employmentrights without being aware of this. Conversely, individuals who may think that theyare employees, and therefore have access to employment rights, may turn out not tobe on closer legal inspection.

· Given uncertainty in the law, some employers may avoid their obligations by anumber of means including exploiting their workers' lack of awareness about theirentitlements.

· The official source of information on the labour market is the Labour ForceSurvey (LFS). This gives a measure of self-employment but it is based on self-reporting - that is the individual's perception of their status. However, self-reportingmay not correspond to the legal classification. Using the LFS alone, then, it isdifficult to assess whether reported changes in the labour market amount to changes inthe number of workers who are protected by the law.

· In addition the LFS does not provide enough information to estimate thenumbers of individuals in the economy who might be 'workers' and so makesevaluation of the effects of legislation which is applied to workers highly problematic.

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1.4 Aims and objectives of the research

As a result of these practical implications arising from the issue of employment status,it was clear further research was needed. This project aimed to address a number ofspecific issues arising from the points just discussed. The principal objectives were:

· To identify the numbers of individuals in the employed labour force who areemployed under various working arrangements (employees, 'workers', and the self-employed).

· To estimate of the number of individuals who might be affected by the wideradoption of the concept of 'worker' in employment law.

· To identify the sources of uncertainty in the application of the current legaltests of employment status.

· To examine the reasons individuals work in non-standard forms ofemployment, the nature of the choices made and the constraints on those choices, andthe perceived costs and benefits to individuals of working under particulararrangements with uncertain legal status.

· To attempt to develop a set of questions which could be included in the LFSfor the purpose of obtaining more reliable information in future on the operation inpractice of the law relating to employment status.

1.5 Methods

To tackle these research questions required an approach which combined a largesample (to address issues of prevalence) and also highly detailed analyses of theworking lives of a (necessarily) much smaller sample of individuals. This wasachieved by a multi-method approach.

The first wave of data was collected from a representative sample of 4,006 membersof the British workforce, as part of an omnibus survey. After an initial screening toexclude those who were unambiguously employees or self-employed, 1,182 wereasked a range of questions about the nature of their employment relationships. Thesecond wave of data collection involved re-visiting a small proportion of those 1,182respondents to gather more in-depth information in less structured discussions, and toanalyse their written contracts of employment or terms and conditions of employment.These qualitative case-studies were based on a combination of focus groups andindividual semi-structured interviews, involving altogether 36 respondents.Telephone interviews were carried out with a further 24 individuals to illuminatesome non-standard working patterns of particular interest which were still not clearfrom the face-to-face interviews.

The quantitative data analysis provided two kinds of evidence on the employmentstatus of individuals. Firstly, it offered evidence of individuals' own assessments ofwhether they were employees or self-employed, or had some other status such as thatof a trainee on a government training scheme. Secondly, individuals' answers to a

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series of questions concerning the nature of their work provided some indication ofwhether they satisfied the tests and factors by which the courts and tribunals judgeemployment status. As we shall see in chapters 3 and 4 below, combining these typesof evidence enables us to make an assessment of the numbers of employees, 'workers'and the self-employed in the employed population as a whole.

The second, qualitative wave of data analysis provided evidence of a third kind,namely very detailed accounts of individuals' experiences of employment which madeit possible for more complete assessments of their legal status to be made.Documentary evidence, including individuals' contracts of employment and writtenstatements of terms and conditions, could be take into account at this stage. Theassessments made involved an element of judgement on the part of the legal membersof the project team, and do not purport to be definitive since it is of course possiblefor lawyers to disagree on application of the law to individual cases: so much is clearfrom the voluminous case law on this subject. However, the qualitative wave ofresearch fulfilled a number of important purposes: testing the reliability of thequantitative analysis; identifying the sources of uncertainty in the application of thelaw; and examining perceptions of the law's operation in practice.

Chapter 2 below explains in more detail the nature of the legal tests which are used bythe courts and tribunals to determine issues of status in employment cases. Chapters 3and 4 then describe the quantitative wave of the research and provide estimates of thenumbers covered by the legal concepts 'employee' and 'worker'. Chapter 5 providesan account of the methods used during the qualitative wave and chapters 6 and 7describe its findings. These suggest that uncertainty in classifying non-standardemployment relationships derives to a large extent from difficulties in applying thetest of mutuality of obligation. The contractual and related documentation issued bycertain employers to non-standard workers is also a source of uncertainty, inparticular where employers insert contractual clauses which purport to 'label' therelationship as one of self-employment, or which have the effect of excluding impliedterms which would assist in establishing employee status. Chapter 8 concludes.

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Chapter 2. The Law Governing the Classification of Employment Relationships

In this chapter we briefly examine the law relating to the classification of employmentrelationships. The law contains various ‘tests’ which can be broken down into anumber of ‘factors’. In practice, courts and tribunals have considerable discretion inhow they apply these tests and factors to individual cases.

2.1 The four common law tests of employee status

The criteria by which legal classifications are determined are not laid down inlegislation, but have been very largely developed through case law. Four tests, inparticular, are widely relied on: ‘control’, ‘integration’, ‘business reality’, and‘mutuality of obligation’ (see Deakin and Morris, 1998: ch. 3.4). Behind these testslies a set of ‘factors’, such as the method of payment chosen by the parties, the lengthand stability of the employment relationship, and the degree of coverage ofdisciplinary and grievance procedures. The weight which courts attach to anyparticular factor appears to be very much a matter of discretion, in part because lowercourts are only subject to review if they commit errors of law in their identification ofthe relevant tests or in their application.

2.1.1 Control

Of the common law tests, the control test is the most traditional, with roots going backto at least the nineteenth century (for an account of the evolution of the control test,see Deakin, 1998). Its use has by no means died out. As recently as 1995, the Courtof Appeal suggested that the test to apply in determining whether an individual was anemployee or self-employed was ‘who lays down what is to be done, the way in whichit is to be done, the means by which it is to be done, and the time when it is done?’1

In its classic form, then, the control test represents the idea that an independentcontractor has greater discretion and autonomy over the way in which they carry outtheir work than is the case with an employee. However, in so far as the ‘control’ testis read as meaning that only those workers who are subjected to close supervision andmonitoring can be classified as employees, it has been subjected to trenchant criticism(in particular by Kahn-Freund, 1951). Some commentators have suggested that ‘theright of control fails to distinguish employment from self-employment because itspresence is entirely consistent with either type of contract’ (Brodie, 1998: 140). Forthese reasons, the test has come to be relied upon less frequently.

2.1.2 Integration

In cases dating from the late 1940s, the integration test was relied on as an alternativeto control which was used to explain, for example, why skilled and professionalworkers, with a large degree of autonomy over how and when they did their work,were nevertheless employees if they worked within large, bureaucratic organisations.The basis of the integration test is that under a contract of service or employment, ‘a

1 Lane v Shire Roofing Co. (Oxford) Ltd. [1995] IRLR 493, 495 (Henry LJ).

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man [sic] is employed as part of the business and his work is done as an integral partof the business; whereas under a contract for services his work, although done for thebusiness, is not integrated into it but is only accessory to it’.2 Similarly, it has beensuggested that ‘the greater the skill required for an employee’s work, the lesssignificant is control in determining whether the employee is under a contract ofservice’.3

Integration, then, places less emphasis upon the personal ‘subordination’ of theemployee to the employer, and more upon the way in which their work is organised.The test could be said to be appropriate to situations in which managerial authority isexercised in a de-personalised way, and subjected to bureaucratic rules andprocedures. The test is arguably of less use in situations where the boundaries of theorganisation are diffuse or unclear, as in the cases of sub-contract or agency labour.

2.1.3 Economic reality

The courts have rarely addressed directly the question of what precisely the commonrules on employment status are trying to achieve. In decisions which would now beregarded as anachronistic, courts at the turn of the century saw the purpose of the‘control’ test as distinguishing between groups of workers on the basis of their socialclass.4 From the more modern perspective of the economic and social legislationwhich has adopted the common law tests of classification, the legal tests can be seenas determining the incidence of statutory rules whose purpose is broadly protective ofthe individual employee. The division between employment and self-employmenttherefore involves an assessment of how far certain social and economic risks are tobe shared between employers, workers, and the state. For example, employees haveaccess to certain social security benefits (claims against the state) and to theprotection of certain expectations of continuing security of income and employment(claims against the employer), from which the self-employed are excluded. At thesame time, employees do not have the same opportunities as the self-employed to setoff their work-related expenditures against income tax.

Conversely, the imposition of certain legal liabilities upon employers can be seen asbased on the view that the employer is better placed than the employee either to avoidthe risk in question by taking steps to contain or neutralise it (the least-cost avoiderrationale), or to spread the risk through insurance or pricing policies (the best insurerrationale), possibly in conjunction with the state through the social insurance andtaxation systems. When, therefore, a court or tribunal makes a ruling on theemployment status of a particular individual, it is in effect deciding where the burdenof taking precautions against the risk of a certain type of loss (such as loss of

2 Stevenson, Jordan & Harrison v MacDonald & Evans [1952] 1 TLR 101 (DenningLJ).

3 Beloff v Pressdram Ltd. [1973] 1 All ER 241, 250; see also Cassidy v Minister ofHealth [1951] 2 KB 343.

4 Simpson v Ebbw Vale Steel, Iron and Coal Co. [1905] 1 KB 453, discussed byDeakin, 1998.

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employment or income, or interference with health of safety at work) should beallocated.

Occasionally, the courts articulate the process of classifying employment relationshipsin precisely this functional sense of ‘risk allocation’. The ‘economic reality’ test,which was adopted by the US Supreme Court in a decision of 19465 and which hashad some influence on the English courts since the late 1960s, comes closest toexpressing this idea.6 This test involves ‘looking to see where the financial risk lies,and whether and how far [the worker] has an opportunity of profiting from soundmanagement in the performance of his task’.7 It therefore implies a test of economicdependence, in the sense that employee status is the result of ‘the extent to which theindividual is dependent or independent of a particular paymaster for the financialexploitation of his talent’.8

The use of the economic reality test may also depend upon the context beingconsidered. In decisions concerning health and safety the courts tend to take the viewthat a broad interpretation should be given to the concept of ‘employee’ in order toensure that employers who are assumed to bear the principal responsibility formaintaining occupational safety do not escape their statutory obligations.9 In othercontexts, however, such as unfair dismissal, it seems that reliance on ‘economicreality’ is less likely to be decisive in favour of a finding of ‘employee’ status.10

2.1.4 Mutuality of obligation

A more serious difficulty in applying the common law criteria of employee statusderives from the growing use since the late 1970s of the ‘mutuality of obligation’ test.This has had the effect of excluding from protection workers in casual employmentrelationships, where the existence of mutual obligations to provide work (in the caseof the employer) and to accept any work which is offered (in the case of the worker)is in doubt. Homeworkers,11 agency workers,12 zero-hours contract workers13 and 5 United States v Silk 331 US 704 (1946).

6 Market Investigations v. Minister of Social Security [1969] 2 QB 173.

7 Lane v. Shire Roofing Co. (Oxford) Ltd. [1995] IRLR 493, 496 (Henry LJ).

8 Hall v. Lorimer [1994] IRLR 171, 174 (Nolan LJ).

9 In particular in Ferguson v. John Dawson & Partners (Contractors) Ltd. [1976]IRLR 376; Lane v. Shire Roofing Co. (Oxford) Ltd. [1995] IRLR 493.

10 See, for example, the unfair dismissal case of Wickens v. Champion EmploymentAgency Ltd. [1984] ICR 365.

11 Airfix Footwear Ltd v Cope [1978] ICR 1210; Nethermere (St Neots) Ltd v Tavernaand Gardiner [1984] IRLR 240.

12 Wickens v Champion Employment Agency [1984] ICR 365; Ironmonger vMovefield Ltd [1988] IRLR 461; Pertemps Group plc v. Nixon, 1 July 1993,unreported, EAT/496/91.

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workers in casualised trades or occupations14 have been held to be outside the scopeof protective legislation on these grounds.

The ‘mutuality’ test differs from the ‘economic reality’ test in focusing on the termsof the individual hiring, rather than on evidence of economic dependence. Themutuality test looks for formal evidence of subordination in the contract termsthemselves. Since the contract terms in question are often expressed neither verballynor in writing,15 but may be implied terms whose existence and effect must be derivedfrom a process of legal ‘construction’ (or interpretation) with which the partiesthemselves (and in particular the individual worker) are unlikely to be completelyfamiliar, it may be difficult to determine their meaning in advance of a decision by acourt or employment tribunal.

The difference between a bare expectation of continuing work, and a contractual rightto receive it, may be a fine one, as indicated by the leading case of O’Kelly v.Trusthouse Forte plc. The applicants, who were ‘regular casual’ [sic] wine waiters,16

in the view of the industrial tribunal ‘entered into their relationship with the companyin the expectation that they would be provided with any work which was currentlyavailable.’ However, the tribunal concluded that this ‘was a purely commercialtransaction for the supply and purchase of services for specific events, because therewas no obligation for the company to provide work and no obligation for theapplicants to offer their further services.’17

The application of the mutuality test is particularly significant for workers employedin non-standard forms of work, since it may mean that individuals who do not have abusiness of their own and hence are not genuinely in business on their own account,but who lack a regular and stable employment relationship with a particular employer,are effectively left in a ‘grey zone’ between employment and self-employment. Suchindividuals are often not in a position to take advantage of the benefits, from the pointof view of the tax and national insurance system, of self-employment, since they mayhave few or no business assets and their earnings may be too low or too insecure for

13 Clark v Oxfordshire Health Authority [1998] IRLR 125.

14 O’Kelly v. Trusthouse Forte plc [1983] IRLR 369; Carmichael v National Powerplc [1998] IRLR 301.

15 It may be noted that the statutory obligation upon the employer to supply a writtenstatement of written particulars of employment applies only to employees(Employment Rights Act 1996, section 1; Deakin and Morris, 1998: ch. 4.3).Therefore, there can be no breach of this obligation if a court decides that the effect ofunspoken or unwritten terms is that the individual concerned was not an employee inthe first place.

16 The ‘regular casual’ status of the applicants meant that rather being required toreapply for work from scratch after each job of work had been completed, they werekept on a list by the company and given some preference in hiring for jobs as theycame up.

17 See [1983] IRLR 369.

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them to make significant gains from setting off work-related expenditures againstincome from employment. The ‘economic reality’ test would often (although notalways) classify such individuals as employees, but, as we just noted, this test is notapplied as a matter of course; on the contrary, the courts have explicitly rejected theproposition that casual workers who have no business of their own are, for thatreason, to be regarded as employees of the employers upon whom they are, inpractice, dependent.18

2.1.5 The importance of the statutory context

We have already noted that the economic reality test is more likely to be applied infavour of employee status in cases involving health and safety. However, thepotentially vulnerable position of workers ‘in between’ employment and self-employment is exacerbated by a lack of consistency in the application of the tests ofstatus in the different contexts of tax, social security and employment law. It isgenerally recognised that for the purposes of income tax and liability for socialsecurity contributions, the tests for the existence of a contract of employment aremore easily satisfied than in cases falling under employment protection legislation.19

In addition, legislation in the fields of tax and national insurance occasionally deemsindividuals to be dependent workers for tax and social security purposes even thoughsuch persons would otherwise be classified as self-employed. This is the case, forexample, with certain categories of construction workers,20 and with agencyworkers.21

In this report, we are not directly concerned with the scope of tax and social securitylaw, nor with the administration of the tax and national insurance systems by theInland Revenue and Contributions Agency respectively. Our focus is on theclassification of employment relationships for the purposes of employment law.However, the classification of workers for tax and national insurance purposes bearsindirectly on the approach taken by the courts and tribunals in employment cases, and,

18 See Wickens v. Champion Employment Agency Ltd. [1984] ICR 365, 371: the law‘does not include as a necessary element the question whether the individual carrieson a separate business. If it did, then it would follow that a casual worker mustalways be employed under a contract of service unless he has his own business andthat, plainly [sic], cannot be the law’. This was a case of an agency worker. See alsoO’Kelly v. Trusthouse Forte plc [1983] IRLR 369, in which the Court of Appealdescribed as a ‘misdirection of law’ the view that ‘every independent contractor whois content or able only to attract one client [should] be held to work under a contractof employment’.

19 On this point, see McKendrick, 1990.

20 Construction workers are subject to a system of classification which strictlyregulates whether they are entitled to be treated as self-employed for the purposes ofincome tax. See Harvey, 1995.

21 Income and Corporation Taxes Act 1988, s. 134 (on which see Brady v Hart(trading as Jaclyn Model Agency) [1985] STC 498; Bhadra v Ellan [1988] STC 239);Social Security (Categorisation of Earners) Regulations, SI 1978/1689.

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as we shall see below, also affects the perceptions of employment status which areheld by individuals in non-standard work.

In particular, some difficulties arise from the lack of a precise fit between the status ofindividuals for employment purposes and their position under income tax and socialsecurity legislation. For example, the fact that the legislature has intervened to deemagency workers to be akin to employees for tax and national insurance purposes is notseen as relevant one way for the other for the general determination of individuals’status in employment law.22 This means that individuals who are classified as self-employed under employment law but as employees (or equivalent to employees)under tax and social security law have none of the potential tax advantages of self-employed status. Their income tax is deducted at source, there is no chance to set offwork-related expenditures against earnings, and both the individual and theiremployer must pay Class 1 national insurance contributions. Nor do they qualify forprotected employee status under legislation governing unfair dismissal, redundancycompensation, guaranteed pay, statutory sick pay and statutory maternity pay.

2.2 Factors taken into account by the courts

A high degree of uncertainty is introduced into the law by the courts’ practice oftaking a very large range of factors into account when applying the tests of status. Forexample, in O’Kelly v. Trusthouse Forte plc,23 the following factors (among others)were identified by the industrial tribunal as being consistent with the existence ofemployee status; in other words, they would support a claim of employee statuswithout necessarily being decisive on their own. These included: the lack of anyfinancial investment by the applicants in the company’s business; the payment by thecompany of holiday pay and an incentive bonus based on past service; the presence ofcontrol by the company when the waiters were at work; and the fact that they werepaid weekly in arrears with tax and national insurance deducted at source. A secondcategory contained factors which were regarded as ‘not inconsistent’ with a contractof employment – in other words, their presence would not necessarily be fatal to aclaim of employee status. These were that the applicants were only paid for workactually performed; the lack of regular weekly working hours; and their exclusionfrom the company’s sick pay and pension schemes. Finally, the industrial tribunalrecognised a category of factors which were inconsistent with employee status, that isto say, which would count against the applicant being an employee. These were: thecontracts were terminable without notice on either side; the applicants had the right torefuse work; the company was under no obligation to provide it; the partiesthemselves took the view that the applicants, as casual workers, were independentcontractors; and it was also the recognised custom and practice in the industry to treatcasual workers as employed under contracts for services.

The very final factor listed - the custom in the industry - turned out to be a particularlyimportant influence on the tribunal, which decided that the applicants were self-employed (and this judgement was ultimately upheld by the Court of Appeal). The 22 See McMeechan v Secretary of State for Employment [1997] IRLR 353, 358.

23 [1984] QB 90.

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precise weight which a tribunal may give to a particular factor is not easilydetermined in advance, since a decision to give greater priority to one suchconsideration over another is unlikely, in itself, to give rise to a question of law onwhich there is a right and wrong answer; the determination of employment status issaid to be a question of ‘mixed law and fact’ on which tribunals faced with the sameor very similar facts could, legitimately, disagree. It is only if the tribunal makes anerror of law - in the sense of applying the completely wrong test, or arriving at aconclusion on the facts which is ‘perverse’, in the sense of being a conclusion whichno tribunal could reasonably reach - that an appellate court has the right to interveneand reverse the judgement.24

Table 2.1 lists the principal factors which the courts take into account when decidingthe issue of employment status, and matches them to the four tests referred to in thediscussion above. Since the courts have repeatedly stressed that they have a widediscretion in deciding which factors to take into account, the list cannot be regarded asexhaustive, although it represents an attempt to include those factors which featuremost frequently in the recent case law.

TABLE 2:1. THE RELATIONSHIP BETWEEN FACTORS AND TESTS FORCLASSIFYING EMPLOYMENT RELATIONSHIPS

Control duty to obey ordersdiscretion on hours of worksupervision of mode of working

Integration disciplinary/grievance procedureinclusion in occupational benefit schemes

Economic reality method of paymentfreedom to hire othersproviding own equipmentinvesting in own businessmethod of payment of tax and NIcoverage of sick pay, holiday pay

Mutuality of obligation duration of employmentregularity of employmentright to refuse workcustom in the trade

24 This approach was confirmed in the O’Kelly case itself, although it can also befound in numerous earlier decisions.

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2.3 ‘False’ self-employment

The courts have consistently taken the view that the parties to the employmentrelationship cannot decide to ‘opt in’ or ‘opt out’ of the coverage of legislation,simply by choosing to describe that relationship in a particular way: a ‘label’ will bedisregarded, or at least given very little weight, by comparison with other factors.Hence, if other considerations (of the kind considered above) clearly point towardsemployee status, an agreement between the parties to the effect that the individual isself-employed will have no legal effect.

However, this is not to say that the parties’ own view of the nature of theirrelationship is completely irrelevant. It may be a factor in clarifying an otherwiseunclear situation.25 However, it is only if the other factors are unclear that theparties’ own view of their relationship will carry much weight, and, even then, thecourts will be aware of the need not to take at face value arrangements which onlybenefit one side.26

Nevertheless, there is nothing to prevent the parties voluntarily accepting anarrangement which, objectively speaking, is one of self-employment.27 Moreover, aswe have just seen, the courts focus closely upon the contract terms themselves asindicators of employment status, a focus which, as we have seen, has intensified as aresult of the growth in importance of the ‘mutuality’ test. The interpretation of theterms of the contract is, in the end, a matter for the court and not for the parties, andhence the court can always exercise a degree of control over attempts illegitimately toevade the reach of statutory provisions. However, if contracts are drafted clearlyenough, they can be used to increase the likelihood that a particular relationship isclassified one way or another. For example, the employer may seek to avoid a findingof employee status by stipulating that the worker is not entitled to regularemployment, but only to such employment as the employer chooses, in its discretion,to provide. This may be used as evidence of a lack of mutuality of obligation, and,therefore, that the relationship is not one of employer and employee. In practice, then,

25 As in Pertemps Group plc v. Nixon, unreported, 1 July 1993, EAT/496/91.

26 See e.g. Cataraman Cruisers Ltd v Williams [1994] IRLR 386. Any agreement bythe individual to waive his or her protective rights under the Employment Rights Act1996 or the Trade Union and Labour Relations (Consolidation) Act 1992 is void (seeEmployment Rights Act 1996, s 203; Trade Union and Labour Relations(Consolidation) Act 1992, s 288), but this is little help if the effect of the ‘agreement’is truly to take the individual outside the scope of this protective legislation in the firstplace. See Deakin and Morris, 1998: ch. 3.4.3. See also Brodie, 1998, for asuggestion that ‘judges will steadily become more willing to respect the parties’ owncategorisation’ at least in cases where the parties perceive the relationship as one ofself-employment or where self-employment is the custom for the trade in question.

27 ‘A man [sic] is without question free under the law to contract to carry out certainwork for another without entering into a contract of service. Public policy hasnothing to say either way.’ Calder v H Kitson Vickers & Sons (Engineers) Ltd. [1988]ICR 232, 250 (Ralph Gibson LJ).

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the line between (illegitimate) ‘evasion’ and (legitimate) ‘avoidance’ of protectivelegislation may be a very fine one.

Nevertheless, if the court finds evidence of what it takes to be ‘evasion’, theconsequences for the employee can be very far-reaching. If a court or employmenttribunal is convinced that the parties have ‘colluded’ in adopting a particular workingarrangement in order to evade tax or national insurance contributions, it is likely toregard the contract (of whatever variety) as void on the grounds of illegality; since theindividual will not then be employed under a legally enforceable contract of any kind,he or she cannot qualify for any employment protection rights.28 This places potentialemployees in an invidious position, particularly where the employer offers the termsof employment in question on a ‘take or leave it’ basis. In some cases, it has beenenough for the individual merely to have known that the purpose of the arrangementwas illegal, in order for the court to have regarded the contract as unenforceable.29

In this paper, we will use the term false self-employed to refer to an individual who,objectively speaking, is an employee, but who, for reasons connected to the evasion ofregulatory legislation, is described as self-employed by themselves and/or by theiremployer. The terms borderline employee and borderline self-employed refer toindividuals whose status is, objectively speaking, so unclear that they cannot be easilyclassified as being in one group or another.

2.4 Mutuality of obligation and continuity of employment

It should be noted that many employees who are employed in non-standardemployment do not have access to social security or employment protection rights, forexample because their weekly earnings are below the threshold for national insurancecontributions, or because of gaps in their continuous service. The rules on continuityof employment may interact with the ‘mutuality’ test to deny protection to employeeswith irregular working arrangements. Even if an individual can show that he or shewas employed as an employee for the purposes of a particular task or job, or aparticular period of time, they may be unable to show that they have a ‘global’ or‘umbrella’ contract of employment which spans the gaps between periods of work.30

Where this is the case, they may be unable to accumulate the length of service neededto claim certain employment protection rights. For example, two years of continuousservice are needed to claim a statutory redundancy payment or to benefit from thegeneral protection against unfair dismissal, and regular employment of severalmonths’ duration is normally required in order to acquire rights to statutory sick pay,statutory maternity pay, and guaranteed pay.31

28 Salveson v Simons [1994] IRLR 52.

29 Davidson v Pillay [1979] IRLR 275; Corby v Morrison [1980] IRLR 218.

30 See Nethermere (St Neots) Ltd v Taverna and Gardiner [1984] IRLR 240. Thereseems no reason in principle why there cannot be a contract of employment for theperiod of individual hirings, even if, in between hirings, there is no ‘global’ contractof employment. See Clark v Oxfordshire Health Authority [1998] IRLR 125.

31 See Deakin and Morris, 1998: ch. 3.7, for a full account of these rules.

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A full consideration of the rules relating to continuity of employment is outside thescope of this report. However, the existence of the continuity rules is significant forthe wider issue of employment status, precisely because they mean that the grantingof employee status does not, in itself, necessarily have the effect of conferringemployment protection rights upon a given individual. A second level of ‘thresholds’must be overcome before many of the protective rights which depend upon length andstability of employment are established.

Given that this is the case, it may be noted that there is currently a degree ofduplication between the initial ‘threshold’ test of mutuality of obligation, whichexcludes workers from protection on the grounds that they lack either length orstability of employment, and the additional threshold of continuity of employment.The justification for excluding workers at the initial stage on the grounds of theinstability of their employment is unclear. It could be said, for example, that thecalculation of rights which depend on length of service (such as rights in respect ofsickness, lay-off, maternity, holiday pay and notice of dismissal) becomes moreproblematic if the employment is highly irregular to begin with.32 However, it mustalso be borne in mind that there are many employment protection rights which do notdepend upon length of service at all. These include the various rights not to bedismissed for an ‘inadmissible’ reason.33 However, these policy factors appear not tohave swayed the courts either way; they have generally taken the view that theexistence of the continuity rules has no bearing on the application of the common lawtest of mutuality of obligation at the initial threshold stage.34

32 The assumption that an individual ‘earns’ rights to employment protection in returnfor a formal commitment to his or her employer underlies much of the courts’discussion of mutuality of obligation, although it is rarely articulated precisely inthese terms. If this is the purpose of the mutuality test, then it should be rememberedthat the test, in its present form, goes well beyond excluding cases of short-termhirings; workers with decades of service can lose employment protection rights towhich they would otherwise have been entitled if, before the end of their employment,their relationship with the employer becomes irregular as a result of a falling-off ofdemand. See e.g. Hellyer Bros. Ltd. v McLeod [1987] ICR 526.

33 Employment Rights Act 1996, ss. 100-104; see Deakin and Morris, 1998: ch. 5.5.3.

34 See, in particular, O’Kelly v. Trusthouse Forte plc. [1983] IRLR 369, where theapplicants claimed that they had been dismissed for the ‘inadmissible’ reason of theirmembership of an independent trade union.

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2.5 Fixed term employment, employment for a specific task, and contractingout of employment protection legislation

The employer’s failure to renew a fixed-term contract of employment upon its expiryis, by law, a dismissal, which may in the circumstances be unfair and/or give rise toan obligation to pay redundancy compensation.35 However, if the contract ofemployment is for a fixed term of one year or more, the employee may validly agreeto waive any statutory protection against unfair dismissal which would otherwise ariseupon the failure of the employer to renew the contract when the term expires. If acontract for a fixed term of two years or more is agreed, the employee may, inaddition, validly agree to waive their statutory rights to redundancy compensationupon the expiry of the term. Certain conditions are attached to the form of the waiver;in particular, it must be in writing.36 In most other circumstances, waivers ofemployment protection rights are legally ineffective.37

The important point to make for present purposes is that these legal provisions do nottake fixed-term employees completely outside the scope of legal protection. Theirstatus remains that of employees (assuming that this can be established on the normalgrounds), and their period of service is capable of counting towards continuity ofemployment. The waiver may only enable the employer to avoid statutory liabilitiesin one type of situation, namely where a fixed-term contract comes to an end withoutbeing renewed. The employee cannot validly agree to waive their statutory rights tounfair dismissal protection and redundancy compensation in other situations, such as adismissal prior to the end of the agreed term. However, it should be borne in mindthat an employee must accumulate two years of continuous employment before he orshe can bring a claim of unfair dismissal or redundancy compensation,38 unless theycan show that they were dismissed for an ‘inadmissible’ reason, such as theirmembership or non-membership of an independent trade union.39

The position of an employee employed under a so-called task contract – a contract tocomplete a specific job or task – is different. In law, the completion of the task inquestion discharges the contract automatically – in other words, without a dismissal.40

As a result, the employee concerned has no claim for unfair dismissal or redundancycompensation merely because the employer fails to offer him or her further work.

35 Employment Rights Act 1996, s. 95(1)(b).

36 Provision for waivers in respect of both unfair dismissal and redundancycompensation is made by Employment Rights Act 1996, s. 197. The conditions forthe effectiveness of a waiver are considered in detail by Deakin and Morris, 1998:455-458, 512.

37 Employment Rights Act 1996, s. 203(1).

38 Employment Rights Act 1996, ss. 108 and 155 respectively.

39 On inadmissible and automatically unfair reasons, see Deakin and Morris, 1998:470-477.

40 Wiltshire CC v. NATFHE [1980] ICR 455.

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There is no need, then, for the employer to insist upon a waiver clause. However, forall other purposes the employee is treated as any other employee would be – theyaccumulate continuity of employment by virtue of their service and may qualify for arange of other employment rights.

2.6 Legislative extensions to the categories of protected workers

An extension to the scope of employment legislation has been achieved in certaincontexts through the use of the concept of worker. Under the Employment Rights Act1996, section 230(3), a worker is defined as ‘an individual who has entered into orworks under (or, where the employment has ceased, worked under) - (a) a contract ofemployment, or (b) any other contract, whether express or implied and (if it express)whether oral or in writing, whereby the individual undertakes to do or performpersonally any work or services for another party to the contract whose status is notby virtue of the contract that of a client or customer of any profession or businesscarried on by the individual’.41 Similar definitions have been used in the context ofrecent legislation on the national minimum wage42 and the organisation of workingtime.43

The concept of ‘worker’ includes ‘employees’ - those employed under a contract ofemployment - but also certain independent contractors, who contract personally tosupply their work or labour to the employer. Impliedly, then, this group includesworkers who have a relationship of dependence with the employer in question, butwithout meeting the requirements of employee status; hence they may convenientlybe referred to as ‘dependent self-employed’, although this is not a legal term of art.This category potentially includes freelance workers, sole traders, homeworkers andcasual workers of various kinds.

Certain other groups have a sui generis status. Agency workers fall into this category.At common law, it is sometimes said that their contractual position is unique, and fallsoutside the normal classifications; in other cases, they have been classified asemployed by their agency under contracts for services, on the grounds that they lackmutuality of obligation. Under legislation they are regarded as akin to employees forthe purposes of tax and national insurance contributions; they are also covered byminimum wage protection and by laws governing health and safety anddiscrimination. Relevant legislation does not however stipulate what their statusshould be for other purposes, including employment protection.44

The growing use of the ‘worker’ concept and the specialised definitions of agencyemployment which are used in legislation on minimum wages, working time and

41 See also Trade Union and Labour Relations (Consolidation) Act 1992, s. 296(1).

42 National Minimum Wage Act 1998, s. 54(3).

43 The Working Time Regulations 1998, SI 1998/1833, reg. 2(1).

44 The complex legislation relating to agency workers is summarised in Deakin andMorris, 1998: ch. 3.5.4. On the specific rules relating to trainees, see ibid., ch. 3.5.1.

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discrimination demonstrate that scope exists for statutory intervention aimed atovercoming the rigidity of the common law tests of status.

This is not to suggest that the problem of classifying non-standard employmentrelationships has thereby been completely solved. In particular, the criteria by which‘dependent self-employed’ workers are to be distinguished from those who aregenuinely in business on their own account are not clear.

The extended definition of ‘worker’ offers the possibility of reversing the tendencytowards the exclusion of workers in the above categories. In one sense, it reinstatesthe ‘economic reality’ test in place of mutuality of obligation. It does this by re-focusing attention on whether the worker is in business on his or her own account, asopposed to being economically dependent on the business of the employer. On thisbasis, individuals are less likely to be ‘workers’ in the statutory sense of ‘dependentself-employed’ the greater the extent to which they have an identifiable business oftheir own and hire others to work with them.

From a reading of the aims and form of the ‘worker’ definition, two particular factorswould seem to stand out. The first is whether the individual undertook to supply hisor her personal services, as opposed to the services of a third party or, at a furtherremove, a finished product. This is central to the definition of the contract forservices in this context. Although the individual worker does not have to show thatthere is mutuality of obligation with the employer, he or she does have to demonstratethat they had a contract for the supply of their personal services to the other party.Therefore, if they had the right to substitute another person in their place as thesupplier of labour, there could be scope to argue that they were genuinely in businesson their own account. This is likely to be a cause of uncertainty in the application ofthe ‘worker’ concept. As with mutuality of obligation, any test which depends, in theend, upon the reading of the contract terms will open up the scope for drafting aimedat widening any potential exclusion.

The second factor is whether there was a sufficient degree of economic dependencebetween the two parties. The issue here is how far the applicant was dependent upon aparticular employer or client for the bulk of the work they do, as opposed to havingnumerous clients or buyers of their services. For example, in the tax case of Hall v.Lorimer,45 a key finding was that the respondent, who was a freelance film mixer,worked in the course of a year for over twenty clients, and had over one hundredseparate engagements. In the view of the Court, it could not be said that he wasdependent on any single one of them for a significant proportion of his income. TheCourt of Appeal therefore held that he was self-employed and so classified underSchedule D for the purposes of income tax. It seems likely that, on this basis, hewould have not have been classified as a ‘worker’ for the purposes of employmentlegislation.

Notwithstanding the clarity of the judgment in Hall’s case, an inherent difficulty inthe application of the ‘worker’ concept is that ‘the courts do not have a coherentvision, let alone definition, of what constitutes a business’ (Brodie, 1998: 143). This

45 [1994] IRLR 171.

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means that the dividing line between the ‘worker’ who is dependent on the businessothers on the one hand, and the independent entrepreneur on the other, may be just asunclear as the line between employees and the self-employed.

2.7 A note on terminology

The legal concepts of ‘employee’, ‘self-employed’ and ‘worker’ were explainedabove. In this report we use a number of other terms which are not legal terms of art,but which are useful for referring to workers in particular groups. Hence wesometimes use the term ‘dependent labour’ to refer to individuals who are ‘workers’in the legal sense just explained. We also use two further expressions to clarify thedistinction between those self-employed who are ‘workers’ and those who are not.

The former group are termed ‘dependent self-employed’ and the latter are termed‘independent self-employed’.

The relationship between the different categories is illustrated in figure 2.1. Thisshows while the two categories of ‘employee’ and ‘self-employed’ are mutuallyexclusive, those of ‘worker’ and ‘self-employed’ overlap. The overlapping group, forwhom there is no precise legal term, are those referred to in the report as ‘dependentself-employed’.

A Glossary of Terms used in the report is contained in Appendix 1.

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Figure 2.1

2.8 Conclusion

It has been suggested that although the judges often seem to have a strong ‘intuitiveunderstanding of what amounts to employment and what does not’, the underlyingreasoning behind their judgments is often ‘difficult to supply’ (Brodie, 1998: 139).Perhaps, then, the law offers a kind of ‘elephant test’: the contract of employment is‘an animal too difficult to define, but easy to recognise when you see it’ (Wedderburn,1986 116). If the courts were to take this approach to its extreme, it would becomeimpossible to predict how they would decide the status of a particular individual. Inpractice, it is only in certain cases – generally those arising out of non-standardemployment relationships – that serious uncertainty arises. What we seek to do in theremainder of this Research Paper is to use empirical methods to help identify moreprecisely the sources of uncertainty in the application of the law. To that end, we turnnext to an analysis of the data derived from the quantitative wave of survey analysis.

Employees

Dependent Self-employed

Independent Self-employed

Set A - Workers Set B - Self-employed

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Chapter 3. The Quantitative Wave: Aims, Methods and Main Findings

3.1 Introduction

As we saw in chapter 2, under employment law the relationship between a worker andan employer or work provider is generally either one of employment under a contractof employment (sometimes referred to as a contract of service) or one of self-employment under a contract for services. This is not a clear cut distinction, however.The growth of non-standard forms of work has meant that number of people fallbetween employment and self-employment has grown. We also saw that the scope ofemployment legislation has also been extended in certain contexts through theconcept of ‘worker’, as defined in section 230(3) of the Employment Rights Act 1996.

As explained above, the project aimed to examine the contractual arrangements ofworkers in ‘non-standard’ forms of employment, with a view to examining how thelegal tests for employment and self-employment operated in practice. This usage isnot necessarily the same as in some other contexts where the term non-standardincludes part-time employees. Working part-time does not in itself normally detractfrom employee status, if other factors clearly point towards it.

The initial survey stage (or quantitative wave) aimed to produce a representativepicture of the prevalence of these non-standard forms of employment relationshipsamong the working population. The survey used questions in the first instance, to becompatible with the Labour Force Survey (LFS). This chapter looks at the availabledata from the LFS and some of its limitations. The chapter then discusses the surveymethodology and the basic characteristics of the sample interviewed. It looks in detailat respondents’ perception of their status, perceptions of the permanence of their jobsand the types, if any, of non-standard employment arrangements they work under.

The survey went on to explore respondents’ employment arrangements in more detail,using a series of questions to replicate the types of tests that have been used by courtsand employment tribunals in deciding employment status. This enabled us to assess tosome degree whether the perceptions of individuals about their status were likely tobe accurate according to the relevant legal tests. This is reported in Chapter 4.

3.2 Background

3.2.1 Groups affected

There are a number of working arrangements that are particularly prone to difficultiesof establishing status. These are predominantly the forms of working referred to as‘non-standard’ working arrangements. These include casual work, zero-hourscontracts, homeworking, agency work and so-called ‘borderline’ self-employment(that is, where an individual is not genuinely in business on their own account butnevertheless self-employed in common law, and so excluded from most of the rights).Certain other groups, such as fixed-term contract workers, may have employee statusbut be subject to waiver clauses and rules on continuity of employment which excludethem from employment protection. We look at the groups included in our definitionof

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non-standard employment in more detail below. The definitions used here are for thepurposes of data analysis and are not necessarily legal definitions (see Chapter 2 fordetailed legal terms and Appendix 1 for a Glossary of Terms).

Self-employment

For many self-employed, it is clear that they are running a business on their ownaccount since they bear the responsibility for profit or loss, work for many differentclients and are not dependent on another business. However, there are alsoindividuals who do not have an identifiable business but who work as professionals orfor a number of separate employers or clients. These include freelancers. Theiremployment status is difficult to determine and they are referred to here as ‘borderlineself-employed’.

There are also cases of ‘false self-employment’ where either the employer regards theindividual as self-employed to avoid employment protection rights and/or theemployee knowingly declares themselves self-employed for tax and NationalInsurance purposes.

Agency workers

With agency work, the agency will normally engage or employ the worker whoselabour is supplied to a third party. In this case the traditional functions of theemployer are split between the agency, which has a number of functions includingpayment, and the client or user who benefits from the labour.

It could be argued that the individual is an employee of the agency and, therefore, it isthe agency that should be responsible for ensuring minimum employment standards.However, the employment relationship between the agency and worker is not alwaysclear, and depends upon the nature of the terms of the overall contract with the agencyand the specific terms and conditions set out for each assignment. As we shall seebelow, it is common for agencies to regard workers as self-employed and to issuestatements of particulars stating that to be the case.

Casual workers, homeworkers and zero-hours contracts workers

Difficulties also arise with workers who have no fixed hours of work, but who may becalled upon by the employer as and when work is available. Many of these workers donot have contracts of employment and are often regarded as self-employed by theiremployer. In addition, qualifying periods of continuous employment exclude manycasual workers since they tend to work for an employer intermittently over a numberof years, without any single engagement exceeding the minimum qualifying period.

Zero-hours contracts are found where workers are not guaranteed hours of work (or,therefore, earnings) though they may be required to be available for work at any timeor at specified times. Recent research on zero-hours contracts (Cave, 1997) has foundthat some employers believe that zero hours workers are not employees and many donot provide such employees with the same benefits as permanent workers. In terms ofthe legal position, until more cases are decided, status of workers on zero hourscontracts is still unclear.

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Fixed-term contract workers

There are no legal obstacles to employing workers on fixed-term contracts. Manyfixed-term contract workers will be employees. However, as explained in chapter 2above, a feature of fixed-term employment is that the employee can contract out ofprotection on unfair dismissal protection and redundancy compensation which he orshe would otherwise have upon the completion of the contract. Moreover, generalclaims for unfair dismissal or redundancy cannot be brought unless the employee hastwo years of continuous employment. This means that employers are provided with ameans of avoiding key provisions of employment protection legislation.

Task workers and seasonal workers

As we saw in chapter 2 (Section 2.5), a worker employed for a specific task may bean employee, but will have no claim for unfair dismissal or redundancy compensationupon the expiry of the contract since this takes place automatically, upon thecompletion of the task in question, without there being a dismissal. Seasonal workersmay be affected by this rule; it is not always clear whether they have a fixed-termcontract or a task contract according to the definitions just given. Seasonal workerswill also most likely lack the necessary two years’ continuity of employment to bringclaims in respect of general unfair dismissal and redundancy. Although certain gapsbetween jobs can be counted towards continuity, the gap must be relatively short inrelation to the periods of work on either side.

Other groups

There are a number of other groups that probably fall into the grey area betweenemployment and self-employment. These include trainees, sub-contractors and thoseworking in partnerships. However, this project confined itself to the main groupslisted above.

3.2.2 Available Data

The most useful source of information on the groups discussed above, is the LabourForce Survey (LFS). The LFS is the largest regular household survey in the UK. Inany three month period, a nationally representative sample of approximately 120,000people aged 16 or over, in around 61,000 households, are interviewed.

The LFS quarter that most closely matches the timing of the interviews for our ownsurvey is that of Winter 1997/98 when interviewing ran from December throughFebruary. For this quarter 87 per cent of respondents reported that they wereemployees whilst 12 per cent said they were self-employed. The LFS also asks allemployees whether, leaving aside their own personal intentions, their main job is non-permanent in some way. The data show that for the same quarter, 1.7 million peoplewere in temporary employment, representing 6.5 per cent of all those in employment.The survey goes on to ask in which way their jobs are not permanent. Details of theseare given in Table 3:1. The largest group by far, are those on fixed term contracts.They make up half of those who say their jobs are temporary.

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Data on homeworkers and zero-hours contracts is also available from the LFS. Thisindicates that, for the same quarter, 621,000 individuals were working in their ownhome as opposed to those employed in the same grounds and buildings as their home.The number of individuals working on zero hours contracts was fairly small - around200,000 or 0.7 per cent of those in employment.

TABLE 3:1. LFS DATA ON NON-STANDARD WORKING ARRANGEMENTS(WINTER 1997/98)

Proportion of allthose inemployment

%

Numbers in non-standard workand self-employment

LFS Temporary Workers 6.5 1.7 million

Fixed term contracts 3.3 868,000

casual employment 1.2 324,000

agency-supplied tempworkers

0.9 222,000

seasonal work 0.3 88,000

others 0.7 187,000

Other ‘Non-standard’ working

zero hours* 0.7 180,000

homeworking 2.4 621,000

Self-employed 12.4 3.2 million

with employees 3.2 835,000

without employees 9.2 2.4 million

* Figures relate to GB for Spring 1998

It is difficult to estimate the size of other groups, such as borderline self-employed,sub-contractors and people working in partnerships since accurate data are notavailable. Rough estimates of the borderline self-employed can be obtained bylooking at all self-employed, with no employees, by the individual’s occupation. Forexample, it is unlikely that someone working in a secretarial occupation, categorisedas self-employed with no employees is truly self-employed. The Winter 97/98 LFSdata show that, of the self-employed without employees which number around 2.4million, 35,000 are secretaries and clerks, 50,000 sales representatives, 24,000unskilled building workers, 35,000 drivers, 8,000 clergy. This is however, a crudemeasure of borderline self-employment since it is impossible to establish whetherthese people are really running a business.

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3.2.3 Limitations of the LFS Data

The main difficulty with the LFS data is that they are based on self-reporting - that isthe individual’s own perception of their status. The responses given may or may notcorrespond to the legal division between those working under a contract of service(employee) and those working under a contract for services (self-employed).

Added to this is that the questions on the temporary nature of jobs are only asked ofthose people who believe themselves to be employees. Individuals who think they areself-employed but might be classed as an employee at an employment tribunal willnot be asked these questions. The LFS therefore, misses a potentially important groupin terms of those with unclear status.

Finally, the LFS does not provide the information necessary to distinguish betweenthose employed under a contract of employment, the further group of those whowould be included by the concept of ‘worker’ – the ‘dependent self-employed’ - andthe remaining group of ‘independent’ self-employed. It can not therefore, give anaccurate measure of the number of workers who are covered by discriminationlegislation, National Minimum Wage and Working Time Directive.

3.3 Methods

The quantitative wave of the research had a number of objectives. It aimed to producean accurate assessment of the prevalence of non-standard working arrangements andthe proportion of those in employment who may be covered by the ‘worker’definition. The survey data was also to be compared with the LFS and from this,suggestions made as to how the survey could be made more useful for identifying truestatus. Finally, the survey was to generate a sample for further qualitative study.

3.3.1 Surveying Employers?

A number of approaches were considered in the design of the project. One option wasto undertake an employer survey. Although a representative sample of employers iseasy to obtain, there are a number of drawbacks.

• It is likely that employers will have more than one form of non-standardemployment in operation at their establishment. Thus, only a limited amount ofdetail could be obtained about each, without using an overly complex and timeconsuming questionnaire.

• Many employers may not fully understand the legal implications of the contractualarrangements under which staff are employed. This is particularly the case withsmall employers.

• If employers are fully conversant with the employment contracts in use, it ispossible that they will not be candid about practices that may be disadvantageousto the employee. In other words, they may not freely admit that they regard as self-employed, workers who should objectively be treated as employees.

25

It may have been possible to use an employer survey to identify employees in non-standard forms of employment who could then be interviewed separately. However,this posed problems of self selection by employers. Overall, this approach was notconsidered the most suitable methodology.

3.3.2 Survey of individuals It was felt that the most appropriate approach was through individual workers. Thishas the advantage that the individual will only be in one form of non-standardemployment for each job held. It is therefore more practical to gather informationabout each case in some detail. It would also be possible to ask respondents to providecopies of their written contracts for later examination. There are, however, two majordisadvantages with this approach:

• there is no available ‘register’ of people in non-standard forms of employment.Therefore, a screening exercise would be necessary to identify individuals who fellinto the scope of the project. This could lead to a complex and costly methodology.

• many individuals are unlikely to fully understand the nature of their employmentstatus. In the absence of a copy of their contract or other documentation, aconsiderable part of any survey or interview would have to be devoted toestablishing their true employment status.

3.3.3 Survey It was not possible to conduct a bespoke, large scale, random survey of individuals inthe time available. The alternative adopted was to buy space in an omnibus. Sincethese run on a weekly basis, the time and costs involved in setting up a large survey ofindividuals is minimised. Thus, this option provided the possibility of contacting alarge number of individuals over a relatively short period of time. The weekly RSGB Household Omnibus Survey was used as the vehicle throughwhich to run the questions. The omnibus uses a random location sampling method.This utilises 1991 UK Census small area statistics and the Post Office Address File todivide the country into 600 areas of equal population within standard regions. Theseare then stratified by population density and socio-economic grade. To maximise thestatistical accuracy of the sampling, sequential waves of fieldwork are allocatedsystematically across the sampling frame to ensure maximum geographicaldispersion. For each wave of the omnibus one post code from a selection of the 600 samplingpoints is chosen. Each interviewer is provided with 100 addresses from each postcode. Addresses are contacted systematically, with three doors being left after eachsuccessful interview. Interviewing is restricted to afternoons in the weekdays. Toensure a balance of responses, a quota is set by sex, economic activity and presence ofchildren. Questions are administered face-to-face using computer-aided interviewing. As a form of pilot, the questions were placed in the survey for one week and resultsevaluated before committing to further weeks of the survey. This allowed a check tobe made as to whether the questions were working properly and whether the spread of

26

responses was appropriate. The questionnaire had three broad sections: the firstlooking at the individual’s perceived status; the second looking at temporary workingarrangements; and a final section containing a series of questions attempting toreplicate the tests used by Employment Tribunals or Courts. Once satisfied that the questionnaire was suitable, the questions were repeated forthree weeks mid-January to early February 1998. A copy of the questionnaire isincluded in Appendix 2. Across the four weeks, 7651 people aged 16 or older wereinterviewed. All results are weighted to produce population estimates for GreatBritain. In presenting the data, each table includes unweighted bases. This basenumber varies because those cases where the respondent could not answer thequestion have been excluded.

3.4 Economic Activity of Sample The survey was only interested in following up people who were in employment atthe time of the interview. At an early stage in the omnibus questionnaire, individualsare asked about their current situation. Respondents fell into the categories set out intable 3:2. Of the 7651 people aged 16 or older that were interviewed over the four weeks, 4,006were in employment, that is working full-time or part-time. The rest were splitbetween being retired or unemployed, either seeking work or inactive, and weretherefore not asked the employment status questions. All of the analysis in theremainder of the report, therefore, refers to those in employment. TABLE 3:2. STATUS OF WHOLE OMNIBUS SAMPLE

column percentages

Numbers ofrespondents

Proportion ofallrespondents

Working full-time 2882 37.7 Working part-time 1124 14.7 Unemployed and seeking work 1242 16.2 Unemployed and not seeking work 347 4.5 Still at school 73 1.0 In full-time higher education 293 3.8 Retired 1690 22.1

(Unweighted N=7651)

3.5 Comparisons with the Labour Force Survey The first stage of the data analysis was to establish whether there was any bias in theomnibus survey respondents. The survey data are compared with those of the Winter1997/98 quarter of the LFS. As indicated in the previous section, interviewing for thisquarter most closely coincides with the timing of the omnibus survey. Table 3:3

27

makes two points of direct comparison with the LFS, to vouchsafe therepresentativeness of the employment status survey. As can be seen from the table, the results from the two sources are very similar - whatdifferences there are would mostly fall within the normal range of survey error. Wecan, therefore, rely with some confidence on the employment status survey results. TABLE 3:3. MAIN POINTS OF COMPARISON WITH THE LABOUR FORCESURVEY column percentages

LFS - Winter 97/98

Employment statussurvey

In employment Males full-time 50.6 50.8 part-time 4.8 5.0 Females full-time 24.5 23.3 part-time 20.1 21.0 Employment status Employee 86.9 85.9 Self-employed 12.3 12.7 Govt training programme 0.5 0.6 Unpaid family workers 0.3 0.8 (Unweighted N=4006)

Base: All in Employment 3.6 Perceptions of status Employment status, as defined in Table 3:2, is based on the standard LFS questionsthat was replicated in the omnibus survey.46 The respondents were asked whether theywere working as an employee, self-employed or employee of your own business, on agovernment scheme or as an unpaid family worker. The responses are self-reported -in other words, 85.9 per cent of those in employment perceive themselves to beemployees, while 12.7 per cent categorise themselves as self-employed. There wassome difference by sex with a higher proportion of males, 17 per cent, being self-employed compared with only 7.5 per cent of females. Part-time workers wereslightly less likely to be self-employed than those working full-time. Details are givenin Table 3:4.

46 Throughout the survey, respondents who had more than one job were asked toanswer on the basis of their main job.

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TABLE 3:4. PERCEIVED STATUS BY SEX AND PART-TIME/FULL-TIME

row percentages

Employee Self-employed

GovernmentTraining

Unpaid FamilyWorker

Males 82.0 16.9 0.5 0.6 Females 90.9 7.5 0.7 1.0 Full-time 85.1 14.0 0.7 0.3 Part-time 88.3 9.2 0.3 2.2 (Unweighted N = 4006) Base: All in Employment At this stage those who answered that they were on a government training scheme orworked as an unpaid family worker, were filtered out of the analysis since their statusis not at issue, and so were no longer in scope of the survey. Most surveys of employment status rely on the individual’s own assessment of theircurrent position. It is likely however, given the complexity of establishing status andthe range of factors tribunals have to take into account, that some individuals may notbe certain of their status or they maybe mistaken. All remaining respondents wereasked further a question about their working arrangements to provide more insight asto the likelihood of their being employees, genuinely self-employed or fallingsomewhere in between. Respondents were presented with a series of statements andwere asked which best described their situation. Details are given in Table 3:5, brokendown by whether they perceived themselves as employed or self-employed. As to be expected, the majority of respondents indicated that they were being paid awage or salary by an employer. This is consistent with the fact that 86 per cent ofrespondents thought that they were employees. What also appears consistent is thesplit of responses between the employees and self-employed. Nearly all those whohad said they were employees were paid by a wage or salary. Equally, nearly all ofthose indicating that they were self-employed, worked for themselves in some way orwere sole directors of their own businesses, running partnerships or involved inprofessional practices.

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TABLE 3:5. FURTHER ANALYSIS OF STATUS BY PERCEIVED STATUS

column percentages

Which best describes your current situation? PerceivedStatus

Employee

%

Self-employed %

All

%

Paid a salary or wage by an employer 97.3 4.1 85.3 Paid a salary or wage by an agency 1.5 0.9 1.4 Sole director of own limited business 0.0 7.2 1.0 Running or a partner in a business or professionalpractice

0.1 15.8 2.1

Working for yourself 0.1 52.8 6.9 A sub-contractor 0.2 8.5 1.3 Doing freelance work 0.3 9.6 1.5 Refused/Don’t Know 0.4 1.2 0.5 (Unweighted N = 3955) Base: All in employment except 51 respondent who are on Government Training Schemes or areUnpaid Family Workers Of interest were those being paid by an agency, the majority of whom thought thatthey were employees despite the growing trend of agencies to treat temps as self-employed. Only a very small number of employees said they were contractors andfreelancers and a very small number of the self-employed said that they were paid asalary by an employer. This question was also used to identify individuals who were in partnerships or soledirectors of their own limited companies. Although there is some question as to thereal status of individuals in such circumstances, particularly the latter group from ataxation point of view, it was not felt that this survey was the appropriate tool toexplore their status. Indeed, for these people their employment rights are unlikely tobe in dispute since they are the directors of their own companies. These respondentswere filtered out of the questionnaire from this point. On initial view of status, most individuals would appear to categorise themselvesfairly neatly as employees or self-employed and this seems to be consistent with themeans by which they are paid or a superficial view of the circumstances under whichthey work. Only a very small proportion, 1 per cent of all respondents in employment,seemed to provide conflicting answers to the two initial questions examining status.However, as we saw earlier, an individuals’ perceptions may not coincide with theirlegal status and so the survey went on to explore their working arrangements in moredetail to establish if such discrepancies existed. This firstly looked at the self-employed and then examined the temporary nature of jobs.

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3.7 Self-employment When identifying genuine self-employment, one of the more reliable indicators iswhether the individual works alone or has employees. The Inland Revenue and DSSguidance suggest individuals ask themselves, when assessing their own status,whether they are able to hire people on their own terms and whether they pay themout of their own pocket.47 Those respondents who indicated that they were self-employed and/or said they were working for themselves, a sub-contractor or doingfreelance work, were asked whether they employed anyone. The majority of those who said they were self-employed (76%), worked on their own.Only a fifth had workers or employees who they paid whilst 3.2 per cent employedunpaid family workers. This is consistent with findings from both the DTI and theLFS. The former shows that, of the 3.7 million active enterprises at the start of 1996,2.5 million were run by self-employed people without employees.48 The LFSindicates that 74 per cent of self-employed have no employees. From these responses it was assumed that those who had paid employees weregenuinely running a business on their own account. Their status was thought to befairly clearly self-employed so these individuals were filtered out of the survey. Thisleft the remaining three-quarters of self-employed with no paid employees toparticipate in the rest of the survey. Those employing unpaid family workers or whoanswered ‘Don’t know’ were also included. 3.8 In non-standard work? Having eliminated a number of individuals whose status was not an issue for thissurvey49, the questionnaire went on to establish whether any of the respondents wereworking under ‘non-standard’ arrangements. This would then be used to identifythose individuals whose status was potentially ambiguous. 3.8.1 Permanent or temporary? In order that comparisons could be made with the LFS, similar questions were askedabout whether an individual’s job was temporary and in what way it was temporary.Respondents were asked, ‘leaving aside your own personal intentions andcircumstances, is your job a permanent job or is there some way it is not permanent’.Unlike the LFS, self-employed without employees were also asked about thepermanency of their work. For the genuinely self-employed, this question could 47 Employed or Self-employed: A Guide for Tax and National Insurance InlandRevenue, May 1995. 48 Small and medium enterprise - Statistics for the United Kingdom, 1997, SMEStatistics Unit, DTI, July 1998. 49 Those excluded were: self-employed with employees (75 respondents), soledirectors of a limited business or partner in a professional practice (113 respondents),those on government training schemes and unpaid family workers (51 respondents).

31

appear irrelevant because either answer would be accurate. They could regardthemselves as permanently self-employed, whilst each job that they undertake istemporary. It was felt that by excluding them, however, there was a danger theborderline self-employed would be eliminated from the survey. Of those still in scope, just under 90 per cent said their job was permanent. Given thatthere is a degree of insecurity associated with self-employment, it would be expectedthat more of the self-employed would see their job as temporary compared withemployees, and this was the case. There was also variation depending on whether the individual worked full-time orpart-time. Nearly a fifth of those working part-time indicated that their jobs weretemporary, compared with only 8 per cent of those working full-time. Of thoseworking part-time, a much larger proportion of males had temporary jobs comparedwith females (34% compared with 16%) and, in the main, these were respondentswho perceived themselves to be employees. Male part-time employees, therefore,were more likely to see themselves in temporary jobs than female part-time workers.This accounts for why there was little variation in job permanence by sex, despite alarger proportion of females working part-time. Details are given in Table 3:6. TABLE 3:6. FURTHER ANALYSIS OF STATUS BY PERCEIVED STATUS row percentages

Is your job a permanent job or isthere some way that it is NOTpermanent

Permanent%

Not Permanent%

All 89.2 10.8 Sex Males 89.8 10.2 Females 88.6 11.4 Perceived status Employee 91.0 9.0 Self-employed 70.5 29.5 Working: Full-time 92.2 7.8 Part-time 80.9 19.1 (Unweighted N = 3753) Note: Table excludes 14 respondents who answered ‘Don’t know’ to question about permanency oftheir job.

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3.8.2 Types of non-standard work The questionnaire went on to explore non-standard working patterns. Rather thanfiltering out all those who said their job was permanent, as in the LFS, all respondentswere asked whether their work could be described by a number of non-standardworking arrangements. This was done because some respondents could be workingunder non-standard arrangements but not view their jobs as being temporary in anyway. The question also included options for homeworking, working under a zero-hours contract and working as an apprentice. Finally, an option of ‘none of these’ wasincluded to ensure that those who were not working under any non-standardarrangements were able to answer the question. Overall, three-quarters of respondents said that their job was not described by any ofnon-standard arrangements listed. Table 3:7 shows the breakdown by whetherrespondents said their work was permanent or not in the previous question. As to beexpected, the majority of those who believed their jobs to be permanent jobs, were notworking under any of the non-standard forms listed. Of this group 95 per centperceived themselves to be employees. We can assume from this that they are indeedemployees and their status is probably clear. TABLE 3:7. NON-STANDARD WORK UNDERTAKEN BY PERMANENCE OFJOB column percentages

Is your work best described by any ofthe following?

In a permanentjob% (Numbers)

In a temporaryjob% (Numbers)

All % (Numbers)

Not in non-standard work 81.0 82.1 74.2 In non-standard work 19.0 17.9 25.8 (Unweighted N = 3732) Note: Table excludes 35 respondents who answered ‘Don’t know’ to questions on types of non-standard working and permanency of job More interesting were the sizeable minority of individuals, just under a fifth, who hadsaid their job was permanent and went on to describe it as being non-standard in someway. In the case of homeworkers there may be no ambiguity over status. Somehomeworkers, particularly in service sector jobs and non-manual occupations, mayclearly be employees and have an arrangement with their employer to workpermanently at home. For others however, it is likely that their status is unclear. The qualitative wave of the research found that despite the question explicitly askingrespondents to leave aside their own personal intentions and circumstances, the term‘permanent’ was clearly open to various interpretations. For instance, in a subsequenttelephone interview with a student in her gap year, the interviewee reported that hercontract was ‘permanent’, but that in the initial survey she had responded that it wasnot permanent ‘because it’s not a career job’, meaning that she was not intending todo the job for ever. The term “permanent” was also used to refer to a ‘way of life’rather than a particular contract by some self-employed individuals. One face-to-face

33

and two telephone respondents described themselves as permanently self-employed,although for both of them this meant alternating between contracts and periodswithout work – ‘chronic insecurity’ might be a more accurate way to describe theirsituation. This response could reflect the fact that they regard themselves aspermanently self-employed, whilst each job that they undertake is temporary. It mayalso reflect long term relationships with particular clients producing regular, althoughnot continuous, work. There was also a group of respondents who indicated their job was temporary but saidthat it was not described by any of the forms of non-standard working listed. For theseindividuals, this answer may well reflect that they are working in a form of non-standard employment other than those listed in the questions. These respondents willalso have ambiguous status. It is also possible to look at the split between standard and non-standard working byperceived status, sex, and full-time and part-time work. Non-standard working wasmore prevalent amongst part-time than full-time workers. The greatest variationhowever, was between employees and self-employed. Over three-quarters of thoseperceiving their status to be employed said they were not working under any of thearrangements listed. For the self-employed, 55 per cent indicated some form of non-standard working. These self-employed would be excluded from the LFS questions ontemporary work. Thus, non-standard working appears to be much more prevalentamongst the self-employed and slightly more prevalent with those working part-time. TABLE 3:8. TYPES OF NON-STANDARD WORK UNDERTAKEN BYPERMANENCE OF JOB column percentages

Is your work best described by any ofthe following?

In a permanentjob%

In a temporaryjob%

All %

Of those in some form of non-standardwork:

Under contract for fixed period/task 70.6 49.9 63.5 Casual work 10.3 22.6 14.5 Homeworking 9.0 3.5 7.1 Agency temping 1.0 12.3 4.9 Seasonal work 2.1 8.0 4.1 As an apprentice or trainee 4.7 2.1 3.8 Under a zero-hours contract 2.9 3.0 3.0 (Unweighted N =) (655) (343) (998) Note: Table excludes 35 respondents who answered ‘Don’t know’ to questions on types of non-standard working and permanency of job Table 3:8 also looks at the types of non-standard working arrangements. The mostcommon form was working under a contract for a fixed period or task, accounting fornearly two-thirds of respondents. This was followed by casual working andhomeworking. It is possible to make some comparison with the LFS if analysis isconfined to employees whose job is temporary. By matching the LFS filtering, thespread of respondents by type of temporary work was similar, being at most, only one

34

or two percentage points different. This shows that our sample is reasonably in linewith LFS results. Table 3.8 shows that for those who said their job was permanent and specified someform of non-standard working, the majority were working under a fixed term contract,with a small proportion in casual work and homeworking. For those whose job wastemporary, nearly half were working in fixed term contracts, just over a fifth weredoing casual work and a small proportion working through agencies. Looking at this another way, it was only for casual work, agency temping andseasonal work that the majority said their job was not permanent in some way. Forthose working under fixed term contracts, nearly three quarters thought they hadpermanent jobs and for causal workers, just under half believed they had a permanentjob. Under the current routing for the LFS questions, these people would be excludedfrom the figures for temporary workers. These data reproduced in Figure 3.1 ingraphical form. FIGURE 3:1. PERMANENCY OF JOB WITHIN TYPES OF NON-STANDARDWORKING (NUMBERS)

0

100

200

300

400

500

Fix

ed p

erio

d/ta

sk

Cas

ual

Hom

ewor

king

Age

ncy

Sea

sona

l

Zer

o-ho

urs

App

rent

ices

hip

Permanent Not permanent

Examining those in non-standard work further, we found that half perceivedthemselves to be employees and were working full-time. A third also perceivedthemselves to be employees but worked part-time. The remainder were self-employed, the majority working full-time. This reflects the dominance of non-standard work by people on fixed term contracts. Outside these groups, self-employment and part-time work were more prevalent.

35

3.9 Conclusion This analysis has shown that at an initial stage of questioning, respondents fairlyneatly categorised themselves as employed and self-employed, with few appearing toprovide conflicting information about their status and working arrangements. Whenthe permanency of their jobs and existence of non-standard arrangements is examined,more inconsistencies appear. So far we have identified a number of groups whosestatus could be seen as ambiguous. These include:

• the small number of self-employed who say they are paid a salary or wage by anemployer

• a number of contractors and freelance workers who believe they are employees

• three-quarters of the self-employed with no employees, of whom just over half saythey are working in non-standard forms of employment

• nine per cent of employees who say their job is not permanent

• the quarter of employees who work under some form of non-standard arrangement;and

• agency temps Combining these groups together, suggests that there is a fairly large proportion ofpeople in work with potentially ambiguous status. The survey also shows that simplyasking individuals whether their jobs are permanent or not, is not adequate to fullycapture those with potentially temporary jobs or ambiguous status. In particular, thecurrent structure of questions in the LFS may significantly understate the true level ofnon-standard working arrangements, especially for estimating numbers on fixed termcontracts.

36

Chapter 4. Clarifying Employment Status: Quantitative Analysis

4.1 Clarifying employment status The previous chapter provided evidence of the ambiguity in employment status of aproportion of respondents to the survey. Although not the majority of respondents,these ambiguous groups formed a sizeable minority. This self reported status may ormay not correspond to the legal division between those working under a contract ofemployment or service (employees), those included under the definition of ‘workers’,and the independently self-employed. The purpose of the remainder of the survey was to ask questions applying the types oftests that have been used by courts and employment tribunals in deciding thisquestion. This would allow estimates to be generated of the proportion of people inemployment who might fall within the wider definition of ‘worker’ as defined inSection 230 of the Employment Rights Act 1996. 4.1.1 Identifying those with ambiguous status We saw in the previous chapter that the survey asked a series of question to attempt toidentify individuals who were likely to have ambiguous status. The way this wasapproached was to identify those groups for whom we thought there was noambiguity whatsoever about their employment status. Figure 4.1 shows how we putthis into effect. FIGURE 4.1: IDENTIFYING THOSE WITH CLEAR EMPLOYMENT STATUS

Clearly employees

define themselves as an employee

&

are paid a salary or wage

&

hold a permanent job

&

have no ‘non-standard’ workingpatterns

Clearly self-employed

are a director or partner in own

business

&/or

employ others

Just under two-thirds (64 per cent) of respondents were clearly employees since theydefined themselves as employees, were paid a salary or wage, held a permanent job

37

and had no non-standard working patterns. There were no characteristics whatsoeverto suggest any ambiguity. Five per cent of respondents were clearly self-employedsince they were a director or partner in their own business and/or employed others.There seems little doubt that a court or employment tribunal would have anydifficulty in these cases. 4.1.2 Unclear Status In total, therefore, 30 per cent of all those in employment have an employment statusthat, on first inspection, has elements of uncertainty and is not completely clear. Thisresidual group, for whom employment status may be unclear, is made up of two sub-groups: (i) those defining themselves as self-employed, who are not directors or partnersin their own business, and who do not employ others; and, (ii) those defining themselves as employees who have some type of non-standardworking pattern or classified their jobs as non-permanent. The first sub-group may include a proportion of people who could be borderline self-employed, while the non-standard workers may include many who are clearlyemployees, but their atypicality raises queries about their employment status in law. Table 4:1 shows how the original classification of employment status, based in LFSquestions, is affected by this categorisation. In the first instance, 86 per cent ofrespondents in work saw themselves as employees. Of these however, a quarterproved to have uncertain status (22 per cent of respondents in employment). Underthe LFS classification, 13 per cent of respondents in work said they were self-employed but on closer examination, employment status was not certain for nearlytwo-thirds of respondents (or 8 per cent of all respondents in employment). TABLE 4:1 EMPLOYMENT STATUS ON FIRST INSPECTION

column percentages

Employment status Employee 85.9 Clearly employees 63.6 Unclear status 22.3 Self-employed 12.7 Clearly self-employed 5.0 Unclear status 7.7 Govt training programme 0.6 Unpaid family workers 0.8 (Unweighted N = 4006)

A slightly higher proportion of females appear to be clearly employees and a smallerproportion are clearly self-employed. For those with ambiguous status, theproportions are almost identical. In terms of part-time and full-time workers, part-timeworkers are more likely to have unclear status compared with those working full-time.

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4.2 Common law tests of employment status As has been noted, the ultimate arbiter of employment status is a court or employmenttribunal. Over time the type of test and its application has varied (as have the tests andapplications used by administrative arms of government such as the Inland Revenueand Benefits Agency). We saw in Chapter 2 that courts and tribunals use acombination of four separate tests, none of which in themselves can determineemployment status, but examined as a whole allow for a conclusion to be drawn. Inthe survey these tests were tackled in the following ways:

• mutuality of obligation: this refers, amongst other things, to the right to refuse towork on the part of the worker. Respondents were asked whether, when workingfor a particular client, organisation or agency, they were allowed to take on workfrom other clients, organisations or agencies. They were also asked whether theycould refuse work offered to them by the clients, organisations or agencies theyworked for.

A further indication of mutuality of obligation is the regularity and duration ofemployment. If an individual works for a large number of employers or clientsduring the course of a year they are more likely to be regarded as self-employed. Ifthey only work for one organisation for a substantial period of time, they are morelikely to be regarded as employees. The survey asked respondents with unclearstatus how many organisations, agencies or clients they had worked for in the lastsix months.

• the extent of control: this is interpreted as the employer’s right to specify the wayin which work is done. The survey asked respondents whether, when they are atwork, someone has the right to tell them, at any time, what to do or when and howto do it, even if this rarely happened in practice.

• level of integration into the organisation: this looks at whether the worker is ‘partand parcel’ of the organisation. The survey asked respondents whether they werecovered by the grievance or disciplinary procedures of their clients, organisationsor agencies they work for.

• economic reality: this attempts to establish whether the worker is in business on hisor her own account or works for another who takes the ultimate risk of loss orchance of profit. An indicator of economic reality is the ability to sub-contract. Thesurvey asked respondents whether they were free to hire other people, who answerto and are paid by them, to do the work the respondent has personally taken on.The survey also established whether they had to provide the main items ofequipment they needed to do their job, not just the small items many employeesprovide for themselves.

Another important indicator of economic reality is how people are actually paid,the assumption being that those paid a monthly salary or weekly wage are likely tobe employees. The survey also asked individuals whether they paid their ownNational Insurance contributions or income tax or whether this was usuallydeducted by the organisation they worked for. For those people who areemployees, it is the employer’s responsibility to deduct tax and NI contributionsfrom their pay. If this is being done, it may be an indication of employee status.Finally, respondents were asked whether they were entitled to receive sick pay or

39

paid holidays from the organisation they worked for. Again, receiving suchbenefits may be an indication of employee status.

The final issue explored was that of written contracts of employment and otherdocumentation. Respondents were asked whether they had a written contract ofemployment or another document, from their employer or agency, which set out theirterms and conditions in some way. If an employer provides statutory statements ofparticulars, whether or not they believe the worker to be an employee, a tribunalmight decide that the individual is an employee. However, an actual contract orstatement of particulars does not settle status. An absence of documentation certainlydoes not preclude employment under a contract of employment. These questions are only crude attempts to address the sorts of questions anemployment tribunal would examine. In reality the tribunals do not take any particulartest on its own. In addition, these are often not black and white situations and atribunal will assess the merits of each individual case. In designing the survey, wewere aware that some of these questions could be misinterpreted by respondents andanswers given could be inadvertently misleading. For example, the control test islargely irrelevant to those workers who have a high level of professional training.They are likely to have a great deal of autonomy over their work but still beemployees. They are likely to answer that their employer does not dictate the way thework is done. These problems are explored further in the qualitative stage of theproject and are reported in the following chapters. 4.2.1 Tests by perceived status The rest of the survey, and thus the remainder of the analysis in this chapter, includesonly those individuals identified as having unclear status. Those who were clearlyemployees or clearly self-employed (see section 4.1.1) were excluded. Table 4:2presents results of the questions we asked to apply the legal tests, broken down byself-reported employment status. The percentages reflect the proportion ofrespondents who gave an answer consistent with being dependent labour, that isconsistent with being workers or employees and not independently self-employed.The remainder not shown either indicated independence or answered ‘Don’t know’. The Table shows that of all those with unclear status, the test with the largestproportion indicating dependency was that of control. Seventy-eight per cent said thatthere was someone who could direct how their work was undertaken. The questionswith the lowest levels of dependency were two of the three for mutuality ofobligation. These were not as clear cut as would be expected and this suggests thatthis line of questioning was perhaps the weakest or that mutuality of obligation is adifficult concept to pin down. In all, just under half provided answers suggestingdependency. All the questions for the mutuality of obligation test had a fairly high proportion ofrespondents answering ‘Don’t know’ - 8 per cent for ability to refuse work and for thenumber of employers worked for in the last six months and 9 per cent for whetherthey were allowed to work for more than one work provider. The test for integration,that is whether the individual was covered by the clients’ or employers’ grievanceprocedure also produced a fairly large number of don’t knows - 14 per cent. This may

40

suggest either confusion over the meaning of the question or it may show thatrespondents genuinely do not know whether they are covered. TABLE 4:2 TESTS OF DEPENDENCY BY SELF-REPORTED STATUS

Employeeswith

unclearstatus

Self-employed

with unclearstatus

All withunclearstatus

Control test can be told what to do 90 45 78 Integration test Covered by grievance/disciplinaryprocedures

69 21 57

Economic reality test Cannot hire people/sub-contract 91 36 76 Employer provides equipment* 85 20 68 Paid a weekly wage or monthly salary 82 21 66 Employer pays NI/tax 87 7 66 Entitled to sick pay or paid holidays 72 7 54 Mutuality of obligation test Cannot work for more than one workprovider

56 23 47

Cannot refuse work 52 19 43 Worked for only one employer in last 6months

81 45 71

Other information Have a written statement of particulars 75 19 60 (Unweighted N = 1182) Base: all those with potentially unclear status * Excludes 10 per cent of respondents who did not need any equipment. Of those who perceived themselves to be employees, the tests with the largestproportion indicating dependency were ability to sub-contact their work (91%) andthe test of control (90%). The tests with the lowest proportion indicating dependency,as with all respondents, were those relating to mutuality of obligation. For the self-reported self-employed, the tests with the highest incidence ofdependency (45%) were again that of control and the economic reality test of workingfor a single employer in the last six months. In the case of the control test, this couldreflect respondents interpreting the question as following instructions of clients. Justover a third of self-employed also indicated that they could not hire or sub-contracttheir work to other people. In the case of professionals who are self-employed thiscould be a legitimate response since they are often employed for their personal skillsand would not be able to pass the work onto others.

41

The lowest indicator of dependency was whether tax and NI were deducted at originand whether they were entitled to paid leave or sick pay. Only 7 per cent of self-reported self-employed provided answers consistent with dependency. Again, in thecase of agency workers, for example, they may be working as self-employed but stillhave their tax and national insurance deducted by the agency, as required by law. Other key findings include:

• Seventy per cent of those with unclear status had worked for only one employer inthe last six months. Of the self-employed, just under half said this was the case. Itcould be that the individual had not been working and had only just started with thecurrent employer but this is unlikely to be the case for the majority. Duration ofemployment is examined in section 4.4.

• Sixty per cent had a written statement of particulars, three-quarters of employeesand a fifth of self-employed. Part-time workers were also less likely to have acontract of employment.

• Two-thirds were paid a monthly salary or a weekly wage. The majority of thosewho said they were employees were paid in this way compared with a fifth of self-employed.

• The majority of those perceiving themselves to be employees said their employerpaid their NI and tax. However, 8 per cent of employees said they paid their taxand NI and the remainder were unsure.

• Only just over half of respondents with unclear status said they were entitled topaid leave. Just under three quarters of employees said they were entitled to paidleave whilst only 7 per cent of self-employed said this was the case. Of the part-time workers, over half said they were not entitled to paid holidays or sick paycompared with 39 per cent of full-time workers.

As can be seen from the data, for the most part the answers correspond to what wewould expect to find. Of those with unclear status, self-reported employees are muchmore likely than self-reported self-employed to have the characteristics ofdependence. For example, 90 per cent of employees said that while at work someonehad the right to tell them what to do or when and how to do it, compared with 45 percent of those calling themselves self-employed.

Looking at any single test in isolation, the proportion of all those with unclear statuswho would be identified as clearly self-employed ranges from 22 per cent (under thecontrol test) to 57 per cent (under the mutuality of obligation test of refusing work). Inother words, 22 per cent of those with unclear status said there was no one who hadthe right to tell them how the work should be done or replied don’t know.

The closest predictor of self-reported status is whether the individual pays their ownNI contributions and income tax, but as we saw in chapter 2 above, the courts andemployment tribunals do not regard this is as key indicator of actual employmentstatus. Among the self-employed with unclear status 89 per cent pay their own NI/tax,

42

but fewer than 89 per cent meet the self-employment criteria for the four tests. Forexample, there is a 25 percentage point difference between the proportion defined asself-employed under the economic test of sub-contracting, and those paying their ownNI/tax (i.e. 36 - 11 per cent).

4.2.2 Applying the tests to non-standard workers

It was also possible to look at the characteristics of the main groups of non-standardworkers, that is those on fixed term contracts, casual workers, homeworkers andagency workers.

Fixed Term Contracts

The majority of those on fixed term contracts (86 per cent) said they could not hireother people to do the work they had been contracted to do. Three-quarters said theywere covered by the grievance and disciplinary procedure of the organisation theyworked for. Again, the majority (over 80 per cent) said their employer provided theequipment they had to use, that there was some one who could direct the work theywere doing, that they were paid a salary or weekly wage, had tax and NI deducted bythe employing organisation and were given a contract of employment. Three-quartersreceived sick pay and paid holidays and just over three-quarters had worked for onlyone organisation in the last 6 months.

Thus, in the most of the tests, the majority on fixed term contracts provided answersconsistent with being an employee. It was only the tests of being able to refuse workand working for more than one client at a time, were dependency in any doubt.

Casual workers

Nearly two-thirds of casual workers said they could work for other employers, couldrefuse work offered to them and were not covered by their employers' grievance ordisciplinary procedures. Only half were paid a weekly wage or salary, two-thirdsreceived no sick leave or holiday pay and had no contract of employment.

However, the majority (82 per cent) could not hire other people and a similarproportion said they could be directed in their work. Seventy per cent said theiremployer provides the equipment they used whilst two-thirds said their employingorganisation deducted tax and NI. Just over two-thirds had worked for only oneemployer for over a year.

With casual workers the picture is more mixed than with those on fixed termcontracts. Some of the tests suggest dependency for the majority, whilst other clearlysuggest that they are independent labour.

Agency Workers

Ninety-three per cent of agency workers said that someone had the right to tell themwhat to do at work and the majority were not able to hire other people. Just underthree-quarters had equipment provided by their employer and three-quarters had theirtax and NI deducted by their employing organisation.

43

Despite these indications of dependency, only half of agency temps said they werepaid a salary or weekly wage by their employer. Half were covered by theiremployer’s or client's grievance procedure and half of the agency temps said they hada contract of employment or statement of particulars. Just under half said they couldnot work for more than one work provider at a time. Only a quarter were entitled topaid holidays and sick pay and only 14 per cent said they could not refuse work thework offered to them.

More agency temps display characteristics of dependency than homeworkers or casualworkers. However, a sizeable number, around half, are clearly demonstratingcharacteristics of independence.

Homeworkers

Just under two-thirds of homeworkers said that they could work for more than onework provider and the majority said they could refuse work. Just under two-thirdspaid their own tax and NI and most were not were entitled to paid holidays and sickpay. Only a quarter said they were covered by their client’s or employer’s disciplinaryprocedures and just over a quarter had a contract of employment or statement ofparticulars. Only a third said their employer provided the equipment they needed.

Half of the homeworkers said they could not hire other people and just under 42 percent said they could be told what to do in their work. Also, half of the homeworkerssaid they were paid a weekly wage or monthly salary.

Homeworkers present a stronger picture of independence than any of the othergroups. In any of the tests the largest proportion indicating dependence was aroundhalf and this was only for the ability to sub-contract, how they were paid and the testof control.

4.3 Estimating Numbers of ‘Workers’

We can now combine these data in different ways to estimate the proportion of peoplein employment who might be categorised as clearly working on their own account(i.e. the group excluded from the ERA definition of ‘workers’).

Firstly, we looked at the data by the number of tests of dependency individualspassed. The results are presented in Table 4:3. This excludes the question onprovision of equipment because ten per cent of respondents answered they did notneed equipment and could not be classified dependent or independent. Those whopassed all remaining ten questions would be deemed as dependent labour or workerswhilst those passing none would be self-employed.

As can be seen from this, 12 per cent of all those with unclear status have nocharacteristics of being an independent contractor, and on all ten questions are shownto be dependent labour or workers. At the other end of the spectrum, just 2 per centsatisfy all the different tests of independence. This range of results suggests thatattempting to divide those with unclear status in this way would still be difficult for alarge proportion of workers.

44

For employees with unclear status, 17 per cent gave answers consistent withdependency to all ten questions. A further 21 per cent provided an answer consistentwith independence for only one of the ten questions. There were however a smallminority who provided answers consistent with independence for five or more of thequestions. For the self-employed only 9 per cent provided answers consistent withindependence for all ten questions. A further quarter gave a consistent answers for allbut one and another 26 per cent did so for all but two. A small proportion providedanswers consistent with dependency for five or more of the questions. Theseaccounted for ten per cent of the self-employed with unclear status. Again this stillleaves a large group for whom it would be difficult to assess their status.

TABLE 4:3 MULTIPLE TESTS OF DEPENDENCY BY SELF-REPORTEDSTATUS

column percentages

Self-reported

employee

Self-reported

self-employed

All withunclearstatus

Multiple tests of dependency10 tests 16.6 0.2 12.39 tests 20.7 0.3 15.38 tests 19.2 0.7 14.37 tests 17.9 2.2 13.86 tests 11.9 2.7 9.45 tests 6.4 4.1 5.84 tests 4.2 13.8 6.73 tests 2.0 17.3 6.02 tests 0.8 25.5 7.41 test 0.3 24.5 6.7none of the tests 0.0 8.5 2.2

(Unweighted N = 1182)

The information provided in Table 4:3, suggests we need an alternative approach. Wesaw in Chapter 2 above that two factors are particularly important in the definition ofa worker. These are whether the individual undertook to supply his or her personalservices, and whether there was a sufficient degree of economic dependence betweenthe two parties. We saw that on this basis, individuals are less likely to be dependentlabour or ‘workers’ the greater the extent to which they have an identifiable businessof their own and hire others to work with them. What is also important is how far theyare dependent upon a particular employer or client for the bulk of the work they do, asopposed to having numerous clients.

We therefore sought to gain an estimate of the number of ‘workers’ by using acombination of questions based, firstly, on the number of organisations the respondenthas worked for in the last 6 months, and, secondly the group of questions associatedwith economic reality (these were whether the respondent could hire others, whetherthey were paid a wage or salary, whether they paid their own tax and nationalinsurance, and whether they were entitled to sick pay or to paid leave). As with Table

45

4:3 we excluded the question relating to the provision of equipment. These questionswere, we considered, most appropriate for differentiating between dependent andindependent self-employment as defined above.

On this basis, those respondents with unclear status who had worked for more thanone organisation in the last six months and passed all the tests of economic realitywere regarded as independently self-employed. In other words this group had:• worked for more than one employer in the last six months,• were able to sub-contract,• were not paid a weekly wage,• paid their own tax and NI, and• were not entitled to sick pay or paid holidays.

These accounted for only 8 per cent of respondents with unclear status, leaving therest (92 per cent) classified as ‘workers’.

However, if the tests are applied strictly in reverse, in other words, to be a ‘worker’respondents must have worked for only one employer in the last six months and mustfail all the tests of economic reality, in that they did not pay their own tax/NI, wereentitled to paid holidays and so on, then only 35 per cent would be regarded as clearly‘workers’ on this basis.

A further 18 per cent had worked for only one employer and passed only one of thetests of economic reality. We looked at the characteristics of this group and it wouldseem that they are also likely to be ‘workers’ or dependent labour. For example, 98per cent said they were employees, 80 per cent were paid a salary or wage by anemployer and had NI contributions and tax deducted at source. Two-thirds said theyhad a permanent job and a similar proportion had a contract of employment. In termsof the questions relating to the tests, three-quarters were unable to sub-contract andhad the equipment needed provided by their employer. Just under two-thirds werecovered by their employer’s or client’s disciplinary procedures and 90 per cent hadsomeone who could direct their work. Just over half were working on fixed termcontracts, the remainder spread across the other forms of non-standard working.

On this basis we have inferred that just over half of the unclear group are clearly‘workers’ or dependent labour. Thus we arrive at a proportion of individuals, 39 percent, whose status is still unclear. We also looked at the characteristics of thisremaining unclear group to try to identify any pattern which could give a betterindication of their status. This group were evenly split between those who believedthemselves to be employees and those who thought they were self-employed, thosewho believed their jobs were permanent and those who thought they were temporary,and those who had a contract of employment or similar document and those who didnot. Just under half were paid a salary by an employer and half paid their own tax andNI contributions. The majority did not get paid leave or sick pay. Three-quarterscould refuse work from clients and two-thirds could work for more than one client ata time. Just under two thirds said that they were not covered by their employer’s orclient’s disciplinary procedures. However, just under two-thirds could not sub-contract, a similar proportion said that there was someone at work who could tellthem what to do and 60 per cent had equipment provided by their employer. In other

46

words, the picture is unclear. Short of examining each case individually, it would bedifficult to establish whether these individuals should be regarded as ‘workers’ or not.

TABLE 4:4 COMPARISON OF SELF-REPORTED STATUS AND REASSESSEDSTATUS

column percentages

Self-reported

employee

Self-reported

self-employed

All inemployment

On first inspectionEmployee 74.0 63.6Self-employed 37.6 5.0Unclear 25.7 62.4 30.0Gov’t training/Unpaid family worker 1.3

After investigation, adopting economicreality tests and number of clients workedfor in 6 months

Dependent workers 92.2 1.4 79.5Own-account workers 0.3 56.1 7.4Still unclear 7.4 42.4 11.8Gov’t training/Unpaid family worker 1.3

TOTAL 100 100 100.0

The cases that we could identify as clearly employed or self-employed were thencombined with the original group of respondents who were filtered out at an earlystage because their status was clear from answers to early questions. The results areshown in the second half of Table 4.4. This shows that 12 per cent of the totalrespondents still have unclear status. In other words, the proportion of all those inemployment who could be regarded as ‘workers’ or dependent labour varies from 80per cent to 92 per cent depending on how those individuals who were ‘still unclear’would be categorised at a tribunal. Similarly, the group of independent self-employedcould account for between 7.4 per cent and 19 per cent of those in employment.

4.4 Qualifying for employment protection rights on the basis of continuity ofemployment

At present to qualify for many employment protection rights, not only must it bedemonstrated that a contract of employment exists, but the employee must have acontinuous period of employment with the same employer of two years or more. Thisis particularly relevant for the right to claim unfair dismissal and eligibility formaternity rights. The DTI’s Fairness at Work White Paper included the proposal thatthis qualifying period be cut to one year.

We asked all those with whose status had some ambiguity on first inspection, howmany organisations they had worked for in the last six months. We saw in Chapter 4that 71 per cent had worked for only one organisation in the last six months. Theserespondents were then asked how long they had been working for the same work

47

provider. A quarter had been working for that one organisation for less that a year, 17per cent had worked for the one organisation for between one and two years, and 56per cent had worked for that organisation for over two years.

Although far fewer self-employed had worked for only one organisation in the last sixmonths, 45 per cent compared with 81 per cent of employees, for those that had, therewas little difference in the pattern of duration compared with employees. Thissuggests that if someone is self-employed and has been working for only oneorganisation in the last six months, they are likely work for that organisation a similarlength of time as employees.

We can combine the answers to these two questions to look at duration ofemployment with the same employer across all those with ambiguous status. Of allthose with unclear status, 40 per cent had worked for one employer continuously fortwo years or more and 68 per cent had done so for one year or more.

These figures varied by status. Of those who believed they were employees, 45 percent had worked for only one employer for more than two years and 60 per cent hadworked for the same employer for more than one year. Only 34 per cent of self-employed had worked for the same employer for more than a year. Assuming thatthese respondents who believe they are employees can demonstrate that a contract ofemployment exists, lowering the threshold from two to one year, will involve afurther 15 per cent being covered by employment rights.

If we look at the duration of employment using the re-assigned status and assume thatall those who are in the final unclear group are classified as dependent labour or‘workers’, those qualifying for employment rights would be 44 per cent with a twoyear threshold and 58 per cent with a two year qualifying period. This is slightlylower than the proportions under self-reported status.

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4.5 Reasons for working in non-standard arrangements

In the final part of the survey, we asked respondents whose status was ambiguous,why they worked under their current arrangements i.e. in temporary job, under somesort of non-standard working and/or self-employed without employees. Details aregiven in Table 4:5. Overall, just under two-thirds indicated that the way they workedhad been their preference, with a fifth saying that this was the only basis on whichwork was available. The self-employed, were more likely to be working under thatarrangement by their own choice compared with employees. Those who wereemployees were slightly more likely to say that this was their employers' preferenceor the only basis on which they could get work. There was very little variation by sexor whether the respondent worked full or part-time.

TABLE 4:5 REASONS FOR NON-STANDARD WORKING BY STATUS

column percentages

Self-reported

employee

Self-reported

self-employed

All inemployment

Own preference 57 78 64Employers’/Clients’ preference 14 6 11Only basis on which the work was available 22 14 19Some other reason 6 1.5 4Don’t know 2 0.4 1

(Unweighted N = 1182)

4.6 Conclusions

The analysis of the data has shown that a significant proportion of those inemployment have some ambiguity about their status on first inspection. We examinedthose with unclear status using the tests of economic reality and by examining thenumber of clients worked for in the last six months. This allowed us to divide some ofthe remaining respondents into dependent labour, or ‘workers’, and independent self-employed. However, there still remained a group, accounting for 12 per cent of allthose in employment, who could not be assigned either way because they displayedcharacteristics of both dependence or independence. As a result, the proportion ofthose in employment who could be classified as ‘workers’ could range from 80 percent to 92 depending on how the remaining unclear individuals would be categorisedby a court or employment tribunal.

This suggests that by using the 'worker' definition, the number covered byemployment rights might be higher than the 87 per cent who believe that they areemployees according to the LFS. The use of the worker definition might protect up toa further 5 per cent of all those in employment (or about 16 per cent of those whoseemployment status is unclear because they are employed in non-standard work of

49

some kind). It is not possible to be more precise about the numbers who would beaffected by this change because of the difficulties of attempting to assess employmentstatus without examining each case individually.

The second half of the project was designed to approach the assessment of status onjust such an individual, case-by-case basis. It was hoped that this would providegreater insight as to how the survey questions were interpreted by respondents, and tomake it possible to make a more informed assessment of the status of a subset of theoverall sample. The remainder of this report focuses on this stage of the work.

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Chapter 5. The Qualitative Wave: Aims and Methods

5.1 Aims of the in-depth interviews

We now turn to an examination of individuals’ perceptions of non-standard work, asindicated by the evidence obtained from in-depth interviews with the sub-sample ofrespondents, 36 of whom were interviewed face-to-face and 24 by telephone. Theseinterviews were designed to achieve two broad goals. Firstly, they aimed to uncoverricher and more detailed descriptions about the respondents’ employment situation, tobetter understand the difficulties that might arise in assigning non-standard workers tothe status of employee, worker or self-employed. Secondly, the interviews were to beused to assess quality of the data obtained in the initial survey, in terms of thereliability and validity of the responses.

It was anticipated that the material to be collected in this part of the project would beof a complex nature, raising issues with which respondents might not be familiar. Wedecided that the fieldwork would therefore need to be qualitative and to permitrespondents to explore their responses in an unhurried and supportive environment.In order to overcome these problems a three-pronged approach was adopted, using acombination of focus groups, semi-structured face-to-face interviews and brieftelephone interviews.

The interviews and focus groups were conducted on the basis of an aide-mémoireconsisting of a series of open-ended questions, the purpose of which was to structurethe interview in a loose and flexible way (the aide-mémoire is reproduced inAppendix 3). Questions related to the following general areas: the nature of therespondent’s job; flexibility; working with others; pay, the employment relationship;being one’s own boss; setting up a business; security; choice; documentation; andperceptions of employment status.

Focus groups proved to be highly useful for the generation of very rich data,permitting individuals within the groups to contribute more than they might in aninterview.50 One was conducted in a Cambridge College and two others in hotelconference rooms, in the centre of Coventry and Cardiff respectively. Participantswere greeted individually, and the initial survey questionnaire (see Appendix 2) wasre-administered to them. The groups were moderated by a specialist in groupcounselling and focus groups, and the discussion was led by one of the principalresearchers in the project team. Although the participants were guided through thetopics using the aide mémoire, they were also given considerable freedom to developthe conversation in the directions that they saw fit. The discussions lasted forapproximately 100 minutes, including a short coffee break.

Semi-structured interviews, conducted in respondent’s own homes, then pursued theselines of enquiry further, but under greater control of the interviewer. Finally, brieftelephone interviews were used to clarify some of those issues where the numbers of

50 For a recent review of the methodological basis for the use of focus groups, seeGibbs, 1997.

51

focus group and interview respondents were not sufficient, or the issues were seen tobe particularly important. These three methods, combined with the results of therepresentative sample survey, were thought likely to achieve a good combination ofin-depth exploration, theory testing, and theory generation.

5.2 Achieving the sample for in-depth interviews

It was considered that a total of 36 interviewees, split between focus groups andindividual interviews, and a further 24 telephone interviews would provide anadequate basis for the work. 546 eligible respondents from the initial survey agreedto be available for re-interviewing. 11 respondents participated in three focusgroups51 and a further 26 respondents were then be interviewed individually. The totalsample was designed, as far as possible, to contain a range of respondents in fixedterm/task contracts, seasonal work, casual work, zero-hours contracts, homeworking,agency work and borderline self-employment, and to be heterogeneous in terms ofclass, gender and age within each of these categories.

Because of the highly geographically dispersed yet locally clustered nature of thesample, the focus groups had to be in population centres with a population of at leastone million within approximately 30km of a city centre. An inspection of the samplesuggested the three best possibilities to be Cambridge, Coventry and Cardiff. Evenafter refining our approach technique (a letter followed by a telephone call and theoffer of a £15 payment, travelling expenses and childcare), the response rate was verylow. For example in our last and largest focus group in Cardiff, only five of the 16respondents resident in or near Cardiff who had agreed to be re-interviewed wereincluded. Five of the telephone numbers listed in the printout of responses wereincorrect, and only three of these could be corrected via Directory Inquiries or byattempting variations on the number given, thus two potential respondents were lostdue to this52. Of the remaining 14 respondents one refused to take part, five reportedthat they were unavailable on the nominated Saturday morning, and three of thosewho had agreed to attend the focus group did not turn up.

The response rate in all stages of the fieldwork was particularly low among thoselisted as employed under zero-hours contracts. For instance, of the 30 who wereidentified as zero hours contracts in the quantitative wave, only 13 agreed to be re-interviewed, and an interview was only achieved with four of these, two face-to-faceand two via telephone. It was difficult for them to make appointments more than a dayor two ahead if they did not know when they might be working, and in one caseleaving the house for several hours carried with it the risk that they might miss atelephone call offering work. 51 One of the participants in the first focus group had been recruited from a localemployment agency, and had not participated in the initial interview. Her account ofher employment was not used in subsequent analyses.

52 Throughout all of the fieldwork approximately 30% of the telephone numbers werefound to be inaccurate. The reasons for this are not clear, but in some cases trailingzeros were omitted (suggesting a programming problem) in other cases a middle digitwas omitted or incorrect.

52

The response rate for individual interviews was slightly higher than for the focusgroups, as the interviewers could be more flexible in arranging interviews to suit theinterviewees and they could be conducted in interviewee’s own homes. Yet amongthose identified in the initial survey as being in the most irregular types ofemployment there was still a high refusal rate. We suspect that some respondentswere concerned about the confidentiality of the process, particularly as the researchwas linked to a government department and had asked questions about pay and tax.

The focus groups took place in late June and early July 1998. Individuals wereinterviewed in late July and early August 1998. The sample for the interviews wasdrawn from the East Midlands, South Wales, East Anglia, Bristol, Herefordshire,Merseyside, Essex and Birmingham.

5.3 Data Analysis

Three distinct types of data were employed in this project. Firstly, the interviewschedule was re-administered to all 36 face-to-face respondents, and this data wasadded to the initial survey dataset.

Secondly, the recordings of the three focus groups and the 26 face-to-face interviewswere transcribed and analysed using ATLAS.ti software. After several readings of thetranscripts, a coding system of around 30 codes, as shown in Appendix 4, was used tocategorise the data.

Thirdly, the contracts and interview transcripts were copied and analysed separatelyand blind to the other’s judgement by the two legally qualified members of the projectteam.53 The aim of this process was not to provide a definitive legal answer to thequestion of any one individual’s employment status; given the uncertainty thatattaches to employment status, this is simply not possible in the case of non-standardemployment relationships. However, it was expected that a useful workingassessment of status could be made by researchers who were both legally trained andalso experienced in socio-legal aspects of interview work and in the interpretation ofdocumentary contractual material. Such an assessment could be regarded as anapproximation of the assessment of status which would be made by the relevantjudicial or administrative body, should the occasion arise in any individual case. Asjust noted, in order to minimise the risk of subjectivity in the process of assessment,each of the two members of the project team concerned carried out an initialassessment independently of the other; the final assessments were then agreedbetween them.

53 Simon Deakin and Catherine Barnard.

53

5.4 Characteristics of the sample

Characteristics of the sample of respondents are indicated in the Table 5.1, brokendown by the type of non-standard work that they reported themselves as performingin the first wave of the survey. Also reported is the perceived permanence of theiremployment.

TABLE 5.1 NUMBERS OF RESPONDENTS IN THE INTERVIEW SAMPLE, BYTYPE OF CONTRACT AND PERMANENCE OF RELATIONSHIP54

Type of Contract Permanent Non-permanent Don’tKnow

Seasonal work 1 1 0under contract for a fixed period or afixed task

9 5 0

agency temping 1 3 0casual type of work 2 2 0Homeworking 3 0 0under a zero-hours contract 1 1 0as an apprentice or trainee 1 0 0none of the above 5 1 1Don’t Know 0 0 0Total 23 12 1

Table 5.2 breaks down the sample by individuals, indicating their (self-reported) typeof work, occupation, age and gender. The questionnaire was re-administered duringthe second wave of interviewing, and in some cases different answers were given tothis question; these are also recorded in Table 5.2. The Case-study codes are thoseused for the qualitative analysis of the interviews (see below, chapters 6 and 7).

54 This table includes the 10 focus group and 26 individual respondents. Onerespondent was both a homeworker and on fixed contracts, hence the total amounts to37.

54

TABLE 5:2. COMPOSITION OF THE SAMPLE BY TYPE OF WORK, OCCUPATION,AGE AND GENDER

Casestudycode

Type of work,Wave 1

Type of work, Wave2 (if different fromWave 1)

Occupation Age Sex

6 Agency work Fixed term/task andagency work

Clerical worker 59 F

8 Agency work None* ClericalChild minder in previousjob

34 F

27 Agency work Accounts assistant 45 M35 Agency work None Clerical worker 26 F33 Apprenticeship or

traineeshipCasual Nurse 24 M

3 Casual Canteen worker 47 F13 Casual Heavy goods mechanic 24 M31 Casual None Stock controller

Market researcher36 F

11 Casual Viewing assistant 59 M1 Fixed term/task Freelance copy-editor 30 F2 Fixed term/task Manager of charity 50 F4 Fixed term/task Book keeper 37 F10 Fixed term/task Child minder 49 F14 Fixed term/task None Administrator 28 F20 Fixed term/task None Family care worker 40 F21 Fixed term/task Hospital assistant 35 F23 Fixed term/task Teacher 42 F25 Fixed term/task School inspector 57 M26 Fixed term/task Clerical assistant 39 F28 Fixed term/task Cleaner 28 F29 Fixed term/task Hospital doctor 26 M36 Fixed-term/task None Warehouse operative 37 F17 Home working Mortgage consultant 35 M32 Home working None Educational consultant 50 F5 Home working &

fixed term/taskFreelance author andeditor

40 M

7 None Agency work Carer 50 F9 None Health promotion

practitioner49 F

16 None Construction worker 56 M19 None Taxi driver 63 M22 None Casual Cleaner 43 M24 None Builder 37 M30 None Fixed term/task Electronics engineer

Company director31 M

15 Seasonal Mechanic 43 M34 Seasonal Fixed term/task Construction worker 35 M12 Zero hours Coach driver 51 M18 Zero hours Process worker 26 M* None refers to those who said that their job was not described by any of non-standard arrangementslisted in the question.

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As Tables 5.1 and 5.2 indicate, the sample was highly heterogeneous in terms of thetypes of work covered and the nature of the occupations. It also covered a wide rangeof respondents by age, and consisted of approximately equal numbers of male andfemale respondents.

Just over a third of those interviewed said that they were on fixed-term contracts. Themajority of these believed they were in permanent jobs, although around a third saidtheir jobs were temporary. They worked in a range of occupations. Professionalworkers in the sample included a freelance copy-editor, a hospital doctor, and amanager of a charity. Less highly skilled workers included a cleaner and a warehouseoperative.

The agency workers interviewed were predominantly in clerical jobs except for onewho was working as a carer. Most thought of their jobs as temporary. Four casualworkers were interviewed, two of whom thought their jobs were permanent. Theiroccupations included both low skilled work such as a canteen worker and skilled jobssuch as that of a heavy goods mechanic. The three homeworkers interviewed were allin professional jobs that they said were permanent.

Two interviewees were on zero-hours contracts, one as a coach driver and the other asa process worker. One thought that their job was permanent while the other did not.Two seasonal workers were interviewed, one a mechanic and one a constructionworker. Again one thought that their job was permanent while the other said that itwas temporary. The one apprentice was a male nurse who said his job was permanent.

The remaining interviewees did not state in the survey in what respect their job wastemporary. These worked in a range of occupations from a director of their ownprinting company to a taxi driver, a cleaner and a builder.

5.5 Filters for ‘non-standard’ employment

As described in Chapter 3, in the quantitative survey once the self-employed withemployees, sole traders and directors of their own businesses had been filtered out ofthe sample, respondents were asked about the permanence of their job and whetherthey were working under any non-standard forms. As Tables 3.7 and 3.8demonstrate, there were many apparently contradictory responses. Some respondentsreported that they were both permanently employed and working under types ofcontract usually assumed to be non-permanent, such as fixed-term contracts, casual,seasonal or zero-hours.

A small proportion of these apparent inconsistencies appear to have arisen because ofways in which respondents interpreted the term ‘permanent’ (see section 3.8.2,above). Four other groups of respondents were targeted for further exploration bytelephone to boost the sample of face-to-face interviews and explore how respondentswere understanding the terms used in the questionnaire. The four groups were: allseasonal workers; all zero-hours contract workers; respondents who were both ‘undercontract for a fixed period or a fixed task’ and permanent; and respondents who werenot permanent but reported that they were ‘none of these’ to the list of non-standardtypes of work.

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5.5.1 Seasonal employment

Among those reporting to be seasonal workers, several were clearly using a verydifferent meaning for the term to that assumed in the literature. These were people forwhom the quality or quantity of work varied over an annual cycle, but who were paida fixed monthly salary. These included, for instance, an employee in a garage whowas busiest in August with sales of new cars, and outdoor workers who wererestricted by daylight in the hours that they could work in the winter. There were alsoseveral cases of individuals in agriculture or tourism who were laid off for severalmonths of the year, but expected to be re-hired each year, and therefore reported theiremployment to be permanent.

5.5.2 Zero-hours contracts

An attempt was made to contact all 13 respondents who reported being on zero-hourscontracts and had consented to a re-interview, but only four could be re-interviewed,two by telephone and two face-to-face. Neither of the two who were interviewed bytelephone were correctly classified as being on zero-hours contracts. One workedpart-time, with a contract specifying 22 hours per week, but she often worked morehours (for which she was paid) to cover for colleagues. The other was a charityworker who received an annual honorarium of £1,000 to provide a service. Bothrespondents reported that it was the interviewer who, after hearing their jobdescriptions, decided that they were best categorised as employed on zero-hourscontracts. Other reports from respondents also suggested that, despite the ‘none ofthese’ option, in some cases interviewers seemed to encourage respondents to select atleast one item in the list for Q5, even if none was applicable to them. While thenumbers of errors caused by this might have been trivial in the total sample of 4,006,they would have formed a higher proportion of the sub-sample of 1,182 selected aspotentially non-standard.

5.5.3 Permanent and fixed-term contracts

Nine respondents from the initial survey who claimed to be both permanent and fixed-term were re-contacted for a brief telephone interview. One claimed that, althoughshe signed a new contract every three years, this was entirely routine and the job was,to all intensive purposes, permanent. Two were self-employed, and obtained work aseries of fixed-term contracts, interspersed with periods without work. One was notsure whether his own contract was fixed-term or permanent, but the firm he worked athad recently been set up to take over local council gardening services on acompetitive tender basis. The contracts were awarded to the successful tenderer forperiods of five years, and he thought it extremely unlikely that he would be retained iftheir contract were not renewed. One was in a gap year between school anduniversity, so felt that she was only taking on the job for a fixed period, even thoughthe contract was apparently permanent. The other four seemed not to be on fixed-term contracts at all. They were all in long-standing jobs of between 11 and 34 years’tenure to date, all had permanent contracts and all felt confident that they could, ifthey so wished, continue until retirement. As far as can be determined, they chose the‘fixed term’ category as they thought that one came closest to their case (‘fixed’ and‘permanent’ being semantically similar).

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5.5.4 Not permanent and ‘none of these’

66 respondents out of the total sample in the quantitative wave responded that theywere not permanently employed, but also said that none of the types of non-standardwork applied to them. Seven of them were interviewed by telephone to clarify theirstatus. One was working as a nurse on an NHS ‘nursing bank’ which meant being oncall to meet the employers’ requirements as they arose (presumably on a zero hourscontract). Two attributed their lack of permanence to being self-employed. Onecarpet fitter had thought himself non-permanent because he was ‘only’ working part-time, but now (at the time of the telephone follow-up interview) considered himselffull-time and permanent. One woman was employed to sell houses on a new estatewhere there was a clear understanding that she would no longer be employed when allof the houses were sold (which would take years, not months). Yet she expected tobe re-employed when the builders had built another estate in her area. One womanhad been working in a new telephone sales branch, which was set up on anexperimental basis to see whether there was enough work to justify its existence.Although no contractual or other documentation was provided to her, there was aclear understanding that the branch might not remain open. Finally, one machine tooloperator had a permanent contract, but reported that his company had a policy ofpreferentially choosing permanent staff over fixed-term staff for redundancy. Heexplained that management believed that the legal minimum redundancy paymentswere set to increase substantially as a consequence of pending European Unionlegislation, and thus wanted to reduce their liability before this happened.

5.6 Test-retest reliability of the dependency questions

For all respondents re-interviewed or involved in the focus groups, the dependencyquestions asked of them in the first, screening interview were re-administered. Forthe five respondents who had changed jobs between the two interviews, this revealedlittle about the usefulness of the questions, but for the 31 respondents who were in thesame job as before, the ‘test-retest’ data permitted us to evaluate whether respondentswere consistent in their answers. Closer inspection of the results revealed that threeof the respondents frequently responded differently on the two occasions. Two ofthese respondents held multiple jobs, and it seems as if they were taking different jobsto be their ‘main’ job on the two occasions. The other one had been a trainee and maynow have been upgraded. Table 5.3 shows the consistency of answers between the 28respondents for whom we are confident that they are referring to the same job.Respondents are divided into three groups: those giving totally consistent answers;those who gave completely contradictory answers (for example, ‘no’ then ‘yes’, or‘yes’ then ‘no’); and those who changed between ‘yes’ or ‘no’ on one occasion to‘don’t know’ on the other.

TABLE 5.4 TEST-RETEST RELIABILITY FOR DEPENDENCY QUESTIONS(NUMBERS OF CASES)

Question Consistent PartlyInconsistent

FullyInconsistent

11 When you are working for a particularclient, organisation or agency, are you

17 4 7

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allowed to take on work from otherclients, organisations or agencies or not?12 Can you refuse work which is offeredto you by the clients, organisations oragencies which you work for?

23 2 3

13 In your current work are you free tohire other people, who answer to you andare paid by you, to do work you havepersonally taken on, irrespective ofwhether you need to or not?

23 1 4

14 At work, are you covered by thegrievance and disciplinary procedures ofyour clients, organisations or agenciesyou work for?

20 4 4

15 In your current work, do you have toprovide the main items of equipment youneed to do your job, not just the smallitems many employees provide forthemselves such as pens and so on?

24 4 0

16 When you are at work, does someonehave the right to tell you, at any time,what to do or when and how to do it,even if this rarely happens in practice?

27 0 1

Q17 Which of these best describes howyou are paid?

17 1 10

Q18 Do you pay your own nationalinsurance or tax, or is this usuallydeducted by the organisation you workfor?

24 0 4

Q19 Are you entitled to receive sick payor paid holidays from the organisation oragency you work for.

26 1 1

Question 16, concerning control, and Q19, concerning holiday and sick entitlements,clearly performed better than the others in respect of consistency. At the other end ofthe spectrum, only 17 out of the 28 (61%) were consistent in their answers to Q11concerning mutuality of obligation, and Q1755 concerning method of payment. Andonly 20 out of 28 (71%) were consistent on Q14 (integration). The others all achievedconsistency in the 82-86% band.

The in-depth interviews provided some details of the ways in which respondentsfound these questions difficult to answer unambiguously. Respondents were not sure 55 On Q17 some of the inconsistencies were, for present purposes, trivial in as muchas they reflected movements within the forms of payment associated withemployment (monthly and weekly payments), or within forms of payment associatedwith self-employment (that is, fees agreed in advance and piece rates). However,there were still at least three respondents who shifted between these categories. Thisseems to be largely caused by confusion between how and how often people are paid.

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whether Q11 included second jobs or just referred to similar sorts of work. For Q12several employees recounted anecdotes about when they had refused to carry out anunreasonable order. Q13 was sometimes taken to include employees hiring otheremployees as subordinates within their own department. Even the issue of theprovision of paid holidays is not clear; one employee had 8% of his income withheldby the employer, to be paid when he was on leave.

Although the respondents’ interpretations of the questions might not reflect a carefulor accurate reading or understanding of them, the complex nature of the issuesinvolved means that the questions are longer than would be normal for standardquestionnaire items. While the issues they raise may (or may not) be more accuratelyresolved by careful investigation through qualitative research (or in a court oremployment tribunal), in this form of wording they do not provide simple andunproblematic information for the purposes of a questionnaire.

There is another way in which to investigate the reliability of the answers to thesequestions, that is, by examining the individual cases where there is an apparentinconsistency between the responses to these questions and an individual’s self-reported employment status. Two questions were selected for this more detailedscrutiny on the basis that they were perhaps most direct in differentiating between theself-employed and employees, namely Q13 (hiring) and Q16 (taking orders).

Of the 31 re-interviewed respondents who had not changed job between the twowaves, there were 12 who had reported that they were self-employed and 19 whodescribed themselves as employees at the first wave.

The employees, with only two exceptions, were consistent over the two waves insaying that, in keeping with their status, they could not hire others but that someoneelse had the right to tell them what to do. Further questioning in the qualitative stagerevealed that one of these employees meant that he had a lot of freedom to recruitother employees to his department where necessary (but hadn’t fully taken on boardthe clause ‘who are paid by you’). The other also considered himself to be running anautonomous group or department, and as such could not think of anyone who evermight give him an order, but was in all other respects of clear employee status.

The self-employed were more problematic. When first interviewed, four of the 12interviewees said that they could not hire others, but on the second interview only onesaid that they could not hire others, and one replied ‘don’t know; (both of these hadreplied in the affirmative on the first interview). The confusion and ambiguities wereprimarily a distinction between what they thought was practical or possible, ratherthan what they had the right or freedom to do. In some cases they said that they hadhad bad experiences with taking on others, or that they just did not want to, or that itwas not a possibility because they just could not get someone with the rare skillsnecessary (for instance translations into Welsh).

The question concerning taking orders gave even more mixed results; six of the 12self-employed respondents said that someone did have the right to tell them what todo or how to do it on the both of the waves; a further two answered in the affirmativeon one but not the other wave. Clearly for many of them their normal modusoperandi was to be told what needed doing (whether it was where to hang a door, or

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what to write an article about, or what to proof-read, or what colour paint to use) andwhen to do it. Whether these types of instructions constitute a right to give orders tosome-one or simply an offer of an exchange is arguable, but this distinction was notapparent in the responses to these questions or in the qualitative interviews.

Nor is the question necessarily clear-cut in differentiating the dependent from theindependent self-employed. While some dependent self-employed indicated that theywere regularly told what to do by one other individual, at least one of the independentself-employed respondents (such as a domestic builder) also said that they weresubject to orders, meaning from the customers themselves.

5.7 Conclusions

The questions commonly used to define non-standard work are themselvesproblematic. A number of respondents did not follow the exact definitions used in thequestions for a variety of reasons. Some did not differentiate between their ownpersonal intentions and the nature of the contract or arrangement which they had. Inthe case of interpreting the meaning of permanence, some related this to the nature ofcontract signed but others related it to the viability of the firm they worked for.Finally, in some cases confusion arose because people answered in terms of what theythought was practical or possible, rather than what they what they had the right to do.

This does not necessarily have direct implications for the main aims of the presentresearch project. However, it does suggest that, given the normal LFS definitions ofatypical or non-standard work, some groups may be overestimated - for exampleseasonal workers - while others may be greatly underestimated. For example, thenumber on fixed term contracts may well be double that detected in the LFS, wherethey would be excluded from the count of non-standard work as soon as theyanswered that they were permanently employed. Other categories of individuals,particularly those employed on zero-hours contracts, clearly give rise to problemsassociated with measurement using the survey items here, but it is not clear whetherthese would lead to an over- or under-estimate.

There were sufficient reliability problems associated with the questions used to testdependency to suggest that respondents were having problems relating them topractices in their own jobs. It is possible that better survey items might be developedthat would be more reliable – many of the questions broke several of the conventionsof questionnaire wording, being long (over 30 words), containing several sub-clauses,and being ‘double-barrelled’ (for example asking about both grievance anddisciplinary procedures together). However, this was to some degree unavoidable;while there is scope for improving the questions in future surveys, it seems as if alarge part of the unreliability of these questions is caused by the inherently complexnature of the economic relationships that they are attempting to describe. Hence thosequestions which gave rise to the greatest discrepancies were those concerning themutuality of obligation test which, as we shall see below, is difficult to apply inpractice and a source of considerable uncertainty in the classification of employmentrelationships.

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Chapter 6. Employment Status in Practice: Findings of the ‘Qualitative Wave’

6.1 Assessments of employment status

We are now in a position to evaluate the evidence gained from the qualitative wave ofdata collection for our understanding of how the rules governing employment statusoperate in practice. Altogether, there are three separate sources of informationconcerning the assessment of the employment status of the 36 individuals who wereinterviewed face-to-face in the qualitative wave:

• the self-assessments made by each individual when they were first interviewed forthe purposes of the survey (the quantitative wave) and again at the time of thesecond interview (the qualitative wave), when the first questionnaire was re-administered;

• the assessment of status made by the statistical analysis of the survey data derivedfrom the quantitative wave (see chapter 4, above); and

• the legal assessment made by members of the project team in the light of the dataobtained from the interviews carried out in the qualitative wave (see chapter 5above for an account of the methods used here).

6.1.1 The nature of the assessments made

The nature of the assessments made differs in each of the three cases. The shortquestionnaire used for the quantitative wave offered interviewees the followingchoices for their self-assessment: employee, self-employed, working on a governmenttraining scheme, and unpaid family worker. The second assessment, as we saw inchapter 4 above, was based on a statistical analysis of respondents’ answers to theshort questionnaire. As Table 4.4 above shows, the data were analysed in two ways:firstly according to the categories of employee, self-employed, government trainingscheme/unpaid family worker and unclear, and secondly using the categories ofdependent labour, self-employed/independent labour, government trainingscheme/unpaid family worker, and ‘still unclear’. The second analysis enabled us tomake an estimate of the number of ‘dependent workers’, that is, employees and the‘dependent self-employed’, in the overall sample.

For the third assessment, the categories used were: employee, dependent self-employed, and independent self-employed. Again, this classification was used inorder to divide the self-employed into those who would probably be ‘workers’ underrelevant employment legislation (such as section 230(3) of the Employment RightsAct) and those who probably would not (for the meaning of the term ‘worker’ seechapter 2, above). At this stage of the analysis, the former group were termed‘dependent self-employed’ while the latter – those who were not workers – weretermed ‘independent self-employed’. The legal assessment also used the category‘borderline employee/dependent self-employed’ to describe individuals who wereneither clearly employees nor self-employed.

Table 6.1 summarises the assessments made under each of the three headings for theinterviewed sample.

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TABLE 6:1. ASSESSMENTS OF THE EMPLOYMENT STATUS OF RESPONDENTS’ INTERVIEWED FACE-TO-FACE IN THEQUALITATIVE WAVE

Notes:

Under ‘type of self-reported contract’, entries in italics indicate a different type of contract being reported by the respondent on the occasion ofthe second interview.

Under ‘assessed status’, dependent self-employed = a self-employed individual who is also a ‘worker’; independent self-employed = a self-employed individual who is not a ‘worker’.

'In some rows, responses for more than one job are entered. The first set of entries refers to the job described by the respondent at the time of thefirst interview (the 'quantitative wave'). Subsequent rows refer to a further job described at the second interview (the 'qualitative wave').

Casestudycode

Self-reported typeof work

Occupation Age Sex self-reported status Assessment based onthe quantitative wave

Assessment based onthe qualitative wave

1 Fixed term/task Freelance copy-editor 30 F self-employed Independent self-employed

dependent self-employed

2 Fixed term/task manager of charity 50 F employee Dependent labour employee

3 Casual canteen worker 47 F employee Dependent labour employee4 Fixed term/task book keeper 37 F employee Dependent labour employee5 Home work Freelance author and

editor40 M self-employed Independent self-

employedindependent self-employed

6 Agency workFixed-term/task

clerical worker 59 F employee Dependent labour borderline employee ordependent self-employed

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Casestudycode

Self-reported typeof work

Occupation Age Sex self-reported status Assessment based onthe quantitative wave

Assessment based onthe qualitative wave

7 NoneAgency work

Carer 50 F self-employed Dependent labour borderline employee ordependent self-employed

8 Agency workNone

clerical

child minder

34 F employee

self-employed

Still unclear borderline employee ordependent self-employed (agency)independent self-employed (childminder)

9 None Health promotionpractitioner

49 F self-employed Still unclear independent self-employed

10 Fixed term/task child minder 49 F self-employed Still unclear independent self-employed

11 Casual work viewing assistant 59 M employee Still unclear employee12 Zero hours contract coach driver 51 M employee Dependent labour borderline employee or

dependent self-employed

13 Casual heavy goods mechanic 24 M employee Dependent labour employee14 Fixed term/task

NoneAdministrator 28 F employee Dependent labour employee

15 Seasonal Mechanic 43 M employee Dependent labour employee16 None Construction worker 56 M self-employed Still unclear borderline employee or

dependent self-employed

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Casestudycode

Self-reported typeof work

Occupation Age Sex self-reported status Assessment based onthe quantitative wave

Assessment based onthe qualitative wave

17 home working Mortgage consultant 35 M employee Dependent labour employee18 zero hours contract process worker 26 M employee Dependent labour employee19 none taxi driver 63 M self-employed Still unclear independent self-

employed20 fixed term/task

nonefamily care worker 40 F employee Still unclear employee

21 fixed term/task hospital assistant 35 F employee Dependent labour employee22 none

casualCleaner 43 M self-employed Independent self-

employedindependent self-employed

23 fixed term/task Teacher 42 F employee Dependent labour employee24 none Builder 37 M self-employed Still unclear independent self-

employed25 fixed term/task school inspector 57 M self-employed Independent self-

employedindependent self-employed

26 fixed term/task clerical assistant 39 F employee Dependent labour employee27 agency work accounts assistant 45 M employee Dependent labour borderline employee or

dependent self-employed

28 fixed term/task Cleaner 28 F employee Still unclear employee29 fixed term/task hospital doctor 26 M employee Still unclear employee30 none

fixed-term/taskElectronics engineer

company director(printing company)

31 M employee Dependent labour employee

independent self-employed

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Casestudycode

Self-reported typeof work

Occupation Age Sex self-reported status Assessment based onthe quantitative wave

Assessment based onthe qualitative wave

31 CasualNone

stock controller

market researcher

36 F employee Still unclear employee

independent self-employed

32 home working Educational consultant 50 F self-employed Independent self-employed

independent self-employed

33 apprentice or traineecasual

Nurse 24 M employee Dependent labour borderline employee ordependent self-employed

34 Seasonalfixed-term

Construction worker 35 M self-employed Still unclear independent self-employed

35 agency worknone

clerical worker 26 F employee Still unclear borderline employee ordependent self-employed

36 fixed-term/tasknone

Warehouse operative 37 F employee Dependent labour employee

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Table 6:1 shows that there were some variations between the respondents self-reported status and the assessment based on the qualitative wave. Of the 24individuals who said they were employees at the quantitative wave, 18 were finallyassessed to be employees and 6 were thought to be borderline employees ordependent self-employed. Of the 12 who thought they were self-employed, 9 werefinally assessed as independent self-employed, one was thought to be dependent self-employed, and two were classed as borderline employees or dependent self-employed.

Taking the assessments as a whole, we can identify a number of cases of uncertainty –that is, cases in which it was not possible, at one or another stage of the analysis, tomake a clear assessment of legal status. There were also cases of discrepancy, that is,cases in which the assessments made for the individual concerned, although clear inthemselves, differed between the quantitative and qualitative waves of analysis.Summarising Table 6.1, these were as follows:

Uncertainties in the assessments made by the analysis of the quantitative wave: casesclassed as 'still unclear'

The analysis of the quantitative wave (see chapters 3 and 4 above) concluded that thestatus of 13 individuals out of the sub-sample of 36 was ‘still unclear’ (36% of thesub-sample). These were case studies 8, 9, 10, 11, 16, 19, 20, 24, 28, 29, 31, 34 and35.

Uncertainties in the assessments made by the analysis of the qualitative wave: casesclassed as 'borderline'

In eight cases (Case Studies 6, 7, 8, 12, 16, 27, 33 and 35), equivalent to 22% of thesub-sample of 36, a clear assessment could not be made after the legal assessment ofthe qualitative stage. These were the cases classified as ‘borderline employee ordependent self-employed’.

Discrepancies in the assessments made

To some extent, discrepancies are also a sign of uncertainty in the assessment process,and so the division between ‘discrepancies’ and ‘uncertainties’ is not always clear cut;there are also considerable overlaps between the two categories.

There were no differences or discrepancies in the self-assessments made byrespondents on the occasion of the two interviews. This was so even though some ofthem changed jobs between the first and second interview, and some gave differentanswers on the two occasions to the question of which type of non-standard work orcontract best described their situation. This suggests that respondents have a clear ideaof their legal status which remains the same whatever the particular type of non-standard work which they are doing, and whether or not they frequently change jobs.

Discrepancies arising from the analysis of the quantitative wave were nearly all caseswhere no clear classification could be made by these means, in other words, the casewas categorised as ‘still unclear’. For the purposes of our analysis, these cases arebetter thought of as cases of uncertainty rather than clear discrepancies. The onlycase of a clear discrepancy arising from the quantitative wave was Case Study 7, in

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which the respondent assessed herself as self-employed but the analysis of the surveydata classified her as an employee. At the final stage she was classified as borderlineemployee/dependent self-employed.

In the case of the final assessment which was based on all the evidence including thequalitative data and documentary materials derived from the second interview, wefind a clear discrepancy only in Case study 1: here the respondent saw herself as self-employed and the analysis of the quantitative data classed her as independently self-employed, but the legal assessment was that she was dependent self-employed, that isto say, a ‘worker’ within the meaning of section 230 of the Employment Rights Act.

We now examine these cases of uncertainty and discrepancy in more detail.

6.2 Uncertainties in the assessments made by the analysis of the quantitativewave: cases classed as 'still unclear'

Of those classified as unclear by the quantitative analysis, five were classified in thefinal assessment as cases of employees, five as independently self-employed, andthree as borderline employees/dependent self-employed. These last three cases areconsidered in the next subsection together with the other illustrations of respondentswho were classified as ‘borderline employee/dependent self-employed’.

Of the five cases finally classified as employees, three were employed on fixed-termor task contracts (Case Studies 20, 28 and 29). In each case, the reason they had beenclassified as ‘still unclear’ at the quantitative stage was that at the first interview, theyreported having worked for between two and five employers in the past six months.In other respects, their answers to questions relating to economic reality were more inline with being dependent labour, that is, ‘workers’. At the second interview, whenthe short questionnaire which had been used for the survey analysis was re-administered, respondents in Case Studies 28 and 29 changed their answers to thisquestion, indicating now that they had only worked for one employer in the previoussix months. Thus the element of uncertainty here stems from the attempt to determineemployment status on the basis of the number of employers the respondent has had inthe recent past. While this can be a reliable guide in some cases, in the case of fixed-term contract or task workers who move around frequently, it is not a definitive guidesince it is quite possible for them to be employed on a series of contracts some ofwhich may be contracts of employment and some of which are not.

Two others who were finally classified as employees but whose status was ‘stillunclear’ at the quantitative stage were casual workers (Case Studies 11 and 31). CaseStudy 31 was classed as unclear largely because he reported at the first interview thathe paid his own income tax and national insurance contributions. At the secondinterview, it was established that this was incorrect, and that his income tax andnational insurance contributions were deducted at source. The classification wastherefore largely caused by an error or misunderstanding at the stage of the firstinterview. Case Study 31 was classified as ‘still unclear’ because she had worked formore than one employer in the previous six months and stated that she was able totake on work from clients and/or organisations other than her own employer.

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Notwithstanding this answer, the more detailed analysis carried out at the qualitativestage revealed that she was in essence employed as a full-time employee.

In case studies 9, 10, 19, 24 and 34 the final assessment was that the individualsconcerned were independently self-employed. Case Study 9 had worked for severalemployers in the previous six months but failed one of the tests of independence,namely being able to hire others who worked for her. More detailed analysis showedthat she was effectively running her own business even though the business had fewassets and she had refused to consider mortgaging the house to get a bank loan whichmight have enabled her to expand. Although she reiterated at the second interviewthat those with whom she worked were her co-workers and not employed by her, it isalso clear from her responses that she was responsible for directing their work.Although she had one principal client, which pointed in the direction of employee orat least ‘worker status’, she also carried out work for several others. On this basis, shewas classed as independently self-employed in the final assessment.

Case Study 10, a childminder, stated at the second interview that she had seven oreight clients on average at any one time. At the stage of the initial interview shestated she could not hire others to work with her, and also that she was paid on a timerate. These answers were taken to indicate dependent workers status although, on amore detailed analysis, she was clearly an independent worker. It is possible that shesaid she was unable to hire others because of the practical (for example, financial)difficulty of doing so.

Case Studies 24 and 34 were both construction workers who stated at the firstinterview that they had worked for just one employer for the preceding six months.From the data collected at the interview, it is not clear why Case Study 24 answeredthis way; the reply does not tally with other details given of his work. The respondentfor Case Study 34 changed his answer at the second interview. In other respects, theiranswers at both stages clearly indicated independent status: they could choosewhether to take work offered to them by an employer or client, they could hire othersto work with them, and they arranged their own payments of income tax and nationalinsurance contributions.

Case Study 19 was a taxi driver who, again, reported that he had only worked for oneemployer in the previous six months. It appears from the data obtained at thequalitative stage that this must have been a reference to the taxi company with whichthe respondent was associated. However, it was considered at the final stage that thetaxi company could not be described as the employer of the respondent in a legalsense. The company’s role was essentially to provide certain facilities (such as acentralised booking service) for which the respondent paid a fee. It did not guaranteeto provide either work or income to the respondent. On this basis, it was concludedthat the respondent was a genuinely independent self-employed individual.

Our examination of the above cases illustrates some of the limitations which areinherent in the use of quantitative analysis to make a determination of employmentstatus. The quantitative stage of analysis involves a trade-off between theselimitations and the advantages of obtaining a large representative sample ofrespondents.

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Firstly, some of the questions posed at the quantitative stage were unavoidablyambiguous as means of identifying whether respondents satisfied one or more of thevarious factors which determine employment status. As we saw in chapter 5 above,some ambiguity is unavoidable because those factors themselves are, to a high degree,ambiguous.

Secondly, the quantitative analysis did not allow for the answers to the individualquestions to be weighted. In practice, though, a court or tribunal is highly unlikely toplace equal weight on each of the factors which could be taken into account.Similarly, at the final stage of assessment, a judgement could be made of the weightlikely to be placed on such factors, based on the existing body of case law. Thisprocess of weighting is inevitably impressionistic to some degree; the idea of an‘elephant’ test (see section 2.8, above) cannot be entirely avoided. This accounts forsome of the divergencies between the assessments made at the quantitative andqualitative stages.

6.3 Uncertainties in the assessments made by the analysis of the qualitativewave: cases classed as 'borderline'

Eight cases in total could not be clearly classified in the final assessment; they wereconsidered to fall on the borderline between the status of employee and that of a‘dependent self-employed’ person, that it to say, a self-employed ‘worker’. Five ofthese were agency workers (one of whom was also a trainee); the other two wereemployed on arrangements containing elements of false self-employment.

The difficulty in classifying the status of agency workers stemmed largely from theapplication of the mutuality of obligation test. Since the agencies56 concerned did notnecessarily guarantee to find work for their workers between jobs, the workingarrangements could be said to give rise only to a contract for services. Thedocumentation given to these agency workers appeared to have been issued with theaim of deflecting employee status. Under these circumstances, it became highlyproblematic to predict whether a court might imply a term requiring the agency tosupply work if it was available (in return for the worker undertaking to accept it), andhence establish the necessary conditions for mutuality of obligation.

In Case Study 6, several specimen contracts with agencies were obtained. Thespecimen contracts all contained clauses which appeared to be aiming at the exclusionof employee status by a variety of means. One purported to deny that the arrangementconstituted a legally binding contract of employment between the worker and eitherthe agency or the user, by stating instead that the arrangement was a contract forservices (in other words, an arrangement for self-employment). This is an example of

56 Under the Conduct of Employment Agencies and Employment BusinessesRegulations 1976 (SI 1976/715), the correct term for an agency which hires outworkers for particular jobs is an ‘employment business’; an ‘employment agency’ isan organisation concerned with the recruitment and placement of workers with otheremployers. In the text, however, we use the term ‘employment agency’ to refer to theformer kind of business, since this term is in wide use.

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what may be called the ‘relabelling’ technique. Another stipulated that the workerwas not required to accept any assignment, nor was the agency required to find anassignment for the worker. This is an example of the use of express terms to deny theexistence of mutuality of obligation (the ‘mutuality’ technique).

The terms used in these contracts were very similar to the contractual documentationanalysed by the Employment Appeal Tribunal in the Pertemps case.57 That contractcontained the following clauses:

• Temporary workers are engaged under a contract for services…

• The Employment Business agrees to offer to the Temporary Workeropportunities to work as a … where there is a suitable assignment with ahirer… requiring such a Worker. The Employment Business reserves theright to offer any assignment to such Temporary Workers as it may electwhere that assignment is suitable for several workers…

• There is no obligation by the Employment Business to provide or theTemporary Worker to serve any normal number of hours in any day orweek. In the event of the Temporary Worker declining the accept any offerof work, or failing to attend work for any reason, for any period thecontract shall terminate…

In Pertemps, the EAT considered that the terms of the written contract, taken as awhole, were an important indicator that the agency worker concerned was not anemployee.

The contractual documents in Case Study 6 also indicated that once each assignmentwas accepted by the worker, she came under a number of stated obligations, forexample to cooperate with the user’s staff and to follow the work rules of the user.Making such obligations explicit could be seen as evidence that the relationship withthe agency was not based on a contract of employment, for the very reason that suchobligations are normally implied into such a contract; if the worker were truly anemployee, it may be argued, there would be no need to spell them out.58 On the otherhand, it could be said that there is nothing to prevent an employer (or any other party)seeking to make explicit what would otherwise be implicit. On this basis it could besaid that spelling out the obligations of obedience and care does not help to settle theissue of status either way.59

Leaving this point to one side, the presence in the contract of obligations of obedienceand care could be seen as pointing towards the presence of ‘control’. However, it isinherently ambiguous, in the context of an agency relationship, whether such controlis to be exercised by the agency or by the user. It is possible to regard to agency as 57 Unreported, 1 July 1993, Appeal No. EAT/496/91.

58 This was the view of the EAT in the Pertemps case, ibid.

59 This was the approach taken by the Court of Appeal in McMeechan v.Secretary of State for Employment [1997] IRLR 353.

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ultimately having a sufficient degree of control over the way in which the worker is towork during the assignment.60

Moreover, in the case of an agency worker it is unlikely, on balance, that the ‘global’arrangement would constitute a contract of employment. This does not rule out thepossibility that there is a contract of employment during each individual assignmentbut again the point is not clear.

In Case Study 6, the respondent herself saw her relationship with the agency asflexible on the issue of stability of work:

‘ So [X] if you wanted to have six months off.’

‘I could.’

‘You could, the agency wouldn’t have any hold over you at all, apart fromthreatening that they wouldn’t employ you. Does that ever happen, or perhapsyou wouldn’t get such good jobs?’

‘They just don’t call on you. Like where I turned down the twelve-monthcontract, I said is this going to affect me? They said no and in fact they rangup the other day so it obviously hasn’t.’

‘Does that worry you a bit?’

‘Really with an agency, you have to keep in touch with them anyway,otherwise they could forget.’

Case Studies 7, 8, and 35 raised similar issues; in each case, the respondents referredto the flexibility and open-endedness of their arrangement with the agency as offeringthem certain benefits, as well as disadvantages in terms of insecurity. In Case Study27, by contrast, the respondent was employed for long periods on a job whichinvolved working alongside permanent staff doing very much the same job (he was anaccounts assistant) in a large organisation. He would have preferred to have a morestable, ‘permanent’ job:

‘Would you rather have a job with a firm or are you quite happy working foran agency?’

‘I would prefer a permanent job, yeah, if [the client] said OK we’ll take youon permanently, I would say yes.’

‘What would the advantages be?’

‘A more stable sort of environment and you would also have a pension schemeand … the benefits that go with a company.’...

60 See Mersey Docks and Harbours Board v. Coggins and Griffiths (Liverpool)Ltd. [1947] AC 1.

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He also saw himself as under the control of the agency:

‘Do you look upon yourself as being basically your own boss, that you candecide whether you want to stay with them or not?’

‘No, I wouldn’t say I am my own boss because you know you are working fora firm - if it wasn’t them, it would be another agency.’

In this case, the greater stability of the working relationship could be seen as pointingtowards employee status, although, again, there can be no certainty over theimplication of a term under which the agency was required to offer work and therespondent required to accept it.

Case Study 33 concerned a trainee nurse who was also an agency worker. Althoughstill at a probationary stage, he reported that he was employed by an agency and sentto work for a given period for a client or ‘user’. Under his terms of employment, hewas not guaranteed work from the agency; this pointed away from him being anemployee.

Case Study 12 combined elements of zero-hours working and false self-employment.The respondent, a coach driver, had initially been employed on call, but with acontract of employment. Since the initial interview he had been put on a ‘self-employment’ arrangement and now invoiced his employer/client for each job hecarried out. He continued to work exclusively for that company but at the time of thesecond interview was in the process of setting up his own business and was applyingfor a licence to do so. At this time, it could have been argued that, given the elementof exclusive employment and the past history of employee status, the newarrangement would have been classified by a court or employment tribunal as a‘sham’. The initial survey classification of ‘employee’ may be justifiable on theanswers given to the omnibus questionnaire, but the detailed case study evidenceshows that it is impossible to make a classification here with any degree of certainty.

Case Study 16 involved a construction worker whose position resembled that of anemployee. He had long service for one employer, saw himself as under a duty to obeyorders, worked more or less exclusively for one organisation, was employed on aregular and continuous basis, and was under a duty to accept work when offered. Healso regarded himself as an employee in all but name, even though he had reported hisstatus as ‘self-employed’ at the interview for the initial survey. The initial surveyassessment of ‘still unclear’ seems justified in this case: a high degree of uncertaintymust attach to the classification of a case of this kind.

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6.4 Discrepancies in the assessments made

Case Study 1 represents a case of what may be called a clear but ‘partial’ discrepancy.The respondent regarded herself as self-employed and the initial survey analysisclassified her as ‘independent self-employed’. The final legal assessment was that shewas a dependent self-employed worker; in other words, she was more likely to be aprotected worker within section 230(3) than a genuinely independent self-employedindividual.

This respondent worked as a freelance copy-editor for a publishing house. Under thecontract issued by the publishing house, a firm distinction was drawn betweenfreelancers and employees; the documentation referred to the importance of thisdistinction from the point of view of complying with Inland Revenue andContributions Agency rules on tax and National Insurance contributions respectively.The documentation spelt out the employer’s view of the relationship, which was thatthe distinction between freelances and employees was part of what made freelancework attractive to both sides, and specified reasons for the employer’s understandingthat the respondent was not employed as its employee: as a freelancer she would notnormally work on the employer’s premises; she controlled when the work was done,within agreed completion dates; the contractual relationship between the employerand the respondent only began when an order was placed and ended when theemployer paid for the completed work; the respondent did not have an email,telephone number or desk at the employer’s place of work; and she was paid only onpresentation of an invoice for work done.

The documentation contains elements which could have the effect of excluding thepossibility that there was ‘mutuality of obligation’ between the parties. Therespondent’s account of her work in the interview was ambiguous from this point ofview. When asked whether the employer had a duty to provide her with work shereplied ‘absolutely’, but she did not think that she had an overriding contractualrelationship with the employer.

The fact that the respondent worked consistently for a single employer in this waycould weigh in favour of employee status; it could be argued that she had employeestatus during each assignment, but on balance it is unlikely that this was the case. It isextremely doubtful that she had a global contract of employment in between jobs. Shealso stated in her initial survey interview that she could if necessary hire others towork with her, which would count strongly in favour of her being independently self-employed although she did not appear to exercise this right. On the other hand, herdependence on a single client or employer, when coupled with her agreement toprovide her own personal services, indicate that although self-employed, she wouldvery probably be covered by the extended definition of ‘worker’ and so qualify asdependent labour.

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6.5 Identifying the sources of uncertainty in the application of the legal testsof status

On the basis of our analysis of the preceding cases, the following factors can beidentified as principal sources of uncertainty in the application of the legal tests ofstatus:

• attempts by employers to shift the status of workers from that of employees toindependent contractors through methods ranging from ‘relabelling’ to changes inworking arrangements and in methods of payment;

• the use by employers of contractual clauses (which we may usefully call 'status-denying clauses') to point away from employee status, when other factors mighthave pointed towards employee status or were ambiguous; and

• the difficulty in knowing whether a court would be prepared to imply a term formutuality of obligation.

These factors tended to interact in particular cases, above all those involving agencyworkers and workers employed under highly casualised contractual arrangements.

Clear cases of false self-employment in which the employer attempted to change thestatus of the employee by attaching a different ‘label’ to the relationship were lesscommon than situations in which employers seem to have been trying to takeadvantage of the case-law on mutuality, by altering the contract terms in such a wayas to lead a court or tribunal to regard the relationship in terms of a contract forservices. Hence the evidence from the qualitative wave suggests that there may be adegree of iteration between the development of the mutuality test by the courts, andattempts by drafters, acting on behalf of employers, to exclude employee status bydenying any obligation upon the employer to provide work - in other words, the use of‘status-denying’ clauses.

For example, a contract entered into by an agency worker with her agency containedboth types of terms – a ‘relabelling’ clause and one designed to exclude mutuality ofobligation - a ‘status-denying’ clause. The first of these two clauses stated that ‘for theavoidance of doubt, these terms shall not give rise to a contract of employment... andtherefore the [worker] will not have the statutory rights accorded to employees’. Thiswas unlikely to be effective in excluding employee status since it simply representedthe view of one of the parties as to the agreement’s legal effect.

The relevant other term stated:

‘The [worker] acknowledges that it is the nature of temporary work that theremay be periods when no suitable work is available and agrees (a) thatsuitability shall be determined solely by the [agency and user] and (b) that the[agency and user] shall incur no liability towards the [worker] should they failto offer opportunities to work...’.

This would be a more substantial obstacle to employee status, since it raised apresumption that there was no mutuality of obligation. As we saw in chapter 2, a

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court or employment tribunal could conclude, on evidence of a regular and stableworking pattern, that there was an implied obligation to provide work, but thisbecomes highly problematic when an express, written term of the contract clearlystates otherwise. Even if the individual can show that he or she regarded themselvesas under a de facto obligation - which, on the basis of evidence from the interviews, iscommon - this may or may not translate into a legal obligation in the eyes of the court.Moreover, it is often only through costly litigation that the issue can be settled.

The use of contractual documentation to tilt the balance away from employee ordependent worker status also leads to a divergence between the self-perception of theindividuals concerned and the assessment which a court or tribunal is likely to make.As Table 6.1 shows, there was, on the whole, a substantial degree of correspondencebetween the self-assessed status of the respondents and the final assessments made inthe light of the evidence from the qualitative wave of analysis. However, there weresignificant discrepancies in the case of agency workers. In Case Studies 6, 8, 33 and35, agency workers reported themselves to be employees although, as we have justseen, because of the application of the mutuality test, their status would not be clear.Only one of the agency workers reported herself to be self-employed.

Most of the agency workers interviewed, then, appeared to regard themselves asemployees at the same time as appreciating the insecure nature of their relationshipwith the agency. The respondents themselves did not see their insecure contractualposition as affecting the question of whether they were employees or self-employed.Nor did they appear to see employee status as incompatible with the degree offlexibility which agency work offered to them.

6.6 Conclusion

Analysis of the data from the qualitative wave showed a substantial degree ofcorrespondence between the self-assessed status of the respondents and the finalassessments made in the light of the evidence from the qualitative wave of analysis.However, for a quarter of the sub-sample there were discrepancies but in most casesthese were due to uncertainty in the final assessment. For a substantial proportion ofthe sub-sample (22% of cases) it was not possible to make a definitive judgement onwhether the respondents were employees or self-employed.

The principal causes of uncertainty in these cases derived from attempts by employersto use contractual devices of various kinds to tilt the balance away from ‘employee’status. These included ‘relabelling’ clauses which described the working relationshipas one of self-employment and ‘mutuality’ clauses which specified that the employerwas under no obligation to provide work on a continuing basis to the individualconcerned. Clear cases of relabelling were less common than situations in whichemployers had used status denying clauses. This suggests that there may be a degreeof iteration between the development of the mutuality test by the courts, and the useof ‘status denying’ clauses.

Agency workers and workers employed on highly casual working arrangements(including zero-hours contract workers) were the groups most likely to be subject tothis degree of uncertainty. Agency workers on the whole perceived themselves to be

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employees of their agencies, notwithstanding the absence of a formal legalcommitment to find them work. They did not see their insecure contractual position asaffecting the question of whether they were employees or self-employed.

All the cases classified as ‘borderline employees’ at the qualitative stage wouldprobably have come under the extended definition of ‘worker’ which is that used insection 230(3) of the Employment Rights Act 1996. In other words, although self-employed, they contracted to provide their own personal services and had asufficiently high degree of economic dependence on one employer to come under theextended definition. By contrast, the key characteristics of individuals who weregenuinely self-employed were the large number of clients for whom they worked, andthe ability to hire others to work with them (or in substitution for them).

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Chapter 7. Employment Status and the Experience of Non-standard Work

The interview data enable us to build up a picture of how the individuals in the sampleperceived the process of choosing to work in a particular way, and to what extent theysaw self-employment, ‘non-standard’ work and ‘regular’ employment as distinctcategories with advantages and disadvantages. We consider in turn the reasonsrespondents gave for choosing to work in a particular way; the perceived advantagesand disadvantages of different forms of work; and whether they saw their choice ofworking arrangements in terms of a trade-off between these advantages anddisadvantages.

7.1 Reasons for choosing particular forms of employment

Respondents gave a range of answers concerning the nature and degree of choicewhich they had had in deciding on their present form of work. Factors conditioningchoice included the need to fit in with family arrangements; the cost of retrainingfollowing time spent out of full-time work; the time and complexity of setting up abusiness; discrimination against older workers; and the unavailability of regular work.

Achieving greater control over working time so as to fit in with commitments outsidework was a major reason given for adopting non-standard working arrangements: atypical comment was, ‘what I like best about the job is the flexibility it gives me to domy work anytime I like’ (Case Study 1, freelance editor). At the same time, sex,family responsibilities and the age of individuals were important factors influencingthe decision to take up non-standard work. The need to fit working arrangementsaround childcare requirements was one of the principal factors which motivated thosewho had taken up childminding:

‘I had a good job once! I started doing this when I had my own children, yousee, and it’s difficult when you’ve got children. I didn’t want to put mine witha childminder, so you incorporate an extra one into the home and when yourchildren are at school, you need a job that will put you here when they’re hereand in school holidays.’ (Case Study 10, childminder).

The same point was made by Case Study 8, also a child minder.

Age discrimination was also cited as a factor in the context of a return to full-timeemployment after a break for child-rearing. The difficulty of getting a regular jobmade agency work attractive for one individual in this position:

‘Initially I did hope to get another permanent job, either full-time or part-time,but I knew my age was against me. I really think equal opportunities is aname only .... that’s with age, disablement. Yes, they’ll call you for aninterview because there are equal opportunities. But you know full well thatyou are not going to get it. So I am quite content with now, the way I amworking and making a life for myself and paid of course.’ (Case Study 6,agency worker, clerical.)

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The respondent was in her late 50s and had returned to work after a break of almost20 years raising her children. She was also registered as disabled.

Many respondents saw non-standard work as inferior to regular workingarrangements. Agency workers and fixed-term contract workers, in some cases, tookthese forms of work because permanent work was not made available to them (CaseStudies 27 and 26 respectively). One respondent had been dismissed by his employerand re-employed on a self-employed basis. Once this happened he decided to set uphis own business but had not previously considered doing so (Case Study 12).

7.2 Advantages and disadvantages of forms of employment: perceptions ofautonomy and control

Respondents tended to associate autonomy and flexibility with self-employment, onthe one hand, and control and commitment with employment as an employee on theother. However, the nature of these associations was complex and the divide betweenemployment and self-employment was not always clear-cut.

Some freelance workers and self-employed valued the right to organise their work asthey saw fit. One stated: ‘I like to be in control, so the advantage of being self-employed [is] there - I was in control’ (Case Study 8, child minder). Another said:

‘I like the fact that I’m my own boss. To a certain extent, you set your ownhours because if people come and they want you to start at 6 in the morning ifthey’re nurses or they do shift work, you can always say no, you don’t workthose hours. It’s nice to be at home in the summer. It’s nice to call the tune,basically’ (Case Study 10, child minder).

Freelance workers appeared to value the autonomy to arrange a pattern of workingwhich suited their needs:

‘I find that I have developed a way of working, over a series of fifty or socontracts, that I feel very happy with. I wasn’t given guidance, but I didn’tfind that a problem.. I could work out the best way to do things and interactwith the office...I don’t even have to tell them [clients] really. I just take theproduct that they give me, and then return it to them and hopefully that’s whatis required, and then I’m done.’ (Case Study 1, freelance copy editor).

These perceptions have something in common with the idea, implicit in the ‘control’test, that the degree of freedom which an individual has over the way in which theywork is an important indicator of employment status. However, a drawback of thecontrol test - namely that many employees, and not just the self-employed, seethemselves as enjoying a degree of autonomy - also came out in the interviews.Hence, for a senior manager of a charity, the control exercised by her board oftrustees was a matter of degree:

‘It is not they who control me, it is a partnership, I go to them with proposalsand papers and discuss things with them and then they say, carry on... I don’tsee myself as needing to be autonomous or needing to do my own thing

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because I ought to be accountable to the people we are there to serve who areall those voluntary organisations.’ (Case Study 2)

Similarly, a viewing assistant, who was clearly employed as an employee (amongother things he had a written contract of employment) commented:

‘I feel I’m my own boss, yes. I’m obviously not my own boss because I’vegot a manager, but the manager is so flexible with me I feel as if I’m my ownboss’ (Case Study 11).

In practice, then, perceptions of control and accountability are much more complexthan a simple division between employment and self-employment would imply. Theself-employed may come under pressure to accept work from particular clients andmay have to operate to very tight deadlines. Similarly, employees in non-standardwork, such as zero-hours or on-call contracts, often see themselves as being requiredto respond to the employer’s demands, even if their contracts suggest that they mayhave the right to turn down work offered to them. Freelance workers and others whohad no formal commitment to a regular client, and had no formal expectation ofreceiving continuous work, also said that in practice it was often difficult to refusework:

‘So what you’re basically saying is you are free to decide when you work andfor whom’

‘Well, I’m free inasmuch as I’m not free - well, to be honest, no - I’m free todecide when I work, I’m not free to decide who I work for at the momentbecause I have to take whatever I can get. I always pretty much have had totake whatever I can get. So I’m not free to decide who I work for. (CaseStudy 5, freelance author and editor.)

Working time flexibility could also cut both ways. Although, as we have seen, manyrespondents saw such flexibility as an advantage of non-standard employment, verylong hours, unsocial hours working and variability of working hours were problems inpractice both for employees and for the self-employed. For certain employees,including managerial and professional workers, hours were perceived as beingflexible in the employer’s favour. A charity manager said that while her contractedhours were 37 a week, she normally worked 60 or more hours, with adverseconsequences for her health:

‘Yes, its 37 hours in theory and flexible. If I do evening and weekends, intheory I have time off in lieu. One of the reasons I am not well now is that Ihave been overdoing it over 2 years and I look around the voluntary sector andsee a lot of people under stress and getting ill because they are trying so hardto make ends meet and do the job with limited resources and be everything toeverybody and fulfil bottomless demands – so you end up doing excess hours.’(Case Study 2.)

Similarly, a schoolteacher on a fixed-term contract commented on the lack of fixedhours as follows:

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‘Well, I do like it but sometimes, after I’ve had a holiday in particular, but likeI was saying… you can never be a normal person. For example, if friends callunexpectedly, it would be very difficult - my grandmother was ill last year andbecause I had to go and see her in the hospital, I had to stay up till 3 and 4 inthe morning to do my marking! Because you couldn’t go into class and say toGCSE children, I’m not marking your work because - you just can’t do it. Sothat is a source of irritation sometimes.’ (Case Study 23.)

Variability of hours could also be a problem for part-time workers. A part-timeemployee, initially taken on for fifteen hours per week, found herself taking a cut inhours when the firm was ‘going through a fairly rough patch’ (Case Study 4).

7.3 Advantages and disadvantages of forms of employment: perceptions ofinsecurity and risk

With respect to insecurity, on the balance of evidence of the interviews there is againno straightforward division between the perceptions of employees, who might beexpected to have feelings of security, and those of the self-employed, who might beexpected to accept insecurity in return for the prospect of greater reward.

For example, some self-employed workers were not necessarily more insecure thanemployees since they were often able to meet concerns about insecurity on the basisof their reputations:

‘How important is stability for you in having an income, a career structure, apension, working conditions?’

‘Well, I’d like them all but I haven’t got any of them at the moment! I guessmy stability in that job was based purely on my reputation, which was alwaysgood and I never, ever had available places.’ (Case Study 8, child minder.)

By contrast, many employees had concerns about the inherently insecure nature oftheir jobs, concerns which were largely outside their control. This was particularly thecase with fixed-term contract workers. One commented on

‘the anxiety and insecurity of it all and I can keep telling myself, well, in thecommercial sector this is the fact of life, if you don’t sell what you do, youdon’t survive… We have to sell what we are doing to fund us and if we don’tdo that successfully then we don’t deserve to carry on’ (Case Study 2, charitymanager).

A hospital doctor employed on a fixed-term contract as part of his training referred toa growing lack of security of employment:

‘medicine’s always been looked on as having a lot of job security, but I thinkas things are changing and the market environment’s creeping in then thatreally is going’ (Case Study 29).

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Being employed on a series of fixed-term contracts without a clear understanding ofthe legal position61 was also a source of concern for employees:

‘I was a bit concerned but I didn’t want to mention it because I didn’t knowwhether my at the time my boss knew about the two year rule and I thoughtwell, if he keeps me on longer, I’ll keep quiet! But he knew - he obviouslyknew about it - because I saw a note from him asking the admin. person there -when is [X’s] second anniversary, you know.’ (Case Study 26, clericalassistant.)

A hospital doctor employed on a three-year fixed-term contract commented:

‘It gives you a bit of stability but even three years isn’t that long and after that,I may not be able to get a job at all. It’s not common in medicine, but it doeshappen’ (Case Study 29).

Agency workers, likewise, had concerns with insecurity and also with difficulties ofworking alongside permanent staff who were paid more than they were:

‘Those sorts of people - the ones that don’t like agency workers - have theyindicated why they don’t like them?’

‘I think it was because they felt threatened first of all, because they wereactually training us to do what they were doing and human nature being whatit is, you’re going to think - I’m going to train these, they’re paying them lessthan me, I’m going to be out! I think once - they have had redundancies but itwas voluntary and the people who wanted to go went. The other people arestill there. And I think over the time of being there, their fears gradually easedoff.’ (Case Study 26, accounts assistant.)

For agency workers, resentment against the permanent staff was tempered by thefeeling ‘if you weren’t doing this, you could be on the dole’ (Case Study 26). Eventhen, there was the possibility that the employment relationship could be brought to anend at very short notice; the same respondent described how

‘one Monday morning we were working in the city centre and as we went inthere were two of our [agency] supervisors there and they had a list and sawwho was coming in… They were just literally stopping people at the door,

61 As explained in chapter 2 above, an employee employed under a fixed-termcontract may lawfully waive his or her entitlement to claim unfair dismissal orredundancy compensation upon the expiry of the contract (Employment Rights Act1996, section 197); in addition, an employee, whether employed under a fixed term ornot, may not acquire general protection against unfair dismissal, or the right toredundancy compensation, until they have acquired two years of continuousemployment. In practice, the application of these principles to the position of fixed-term employees who work under a series of renewable contracts is highly complex.See Deakin and Morris, 1998: sections 3.7.1, 3.7.2, and 5.4.7.

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sending them over, and I think in one go they got rid of about 150 people thatmorning.’

Respondents on both sides of the employee/self-employed divide expressed concernsabout health and safety. An agency worker reported difficulty in obtainingcompensation after suffering an injury at work for which neither the agency nor theuser would take responsibility. A self-employed construction worker commented onthe high health and safety risks facing subcontractors on building sites:

‘… a lot of companies do this now. They put a scaffold up for brickwork orfor people to put the roof on and then you want to go on the scaffolding afterto put the window in, as soon as they’ve finished the roof… because they’veput the scaffolding up for the roofers, they’ve put a sign on it saying “notsuitable for anything else”. So if you go on after them and you fall off thatscaffolding, it clears them of liability for your injuries. Which is commonpractice now.’ (Case Study 34)

A majority of the respondents also associated the work they were doing with anabsence of long-term financial security. Several agency workers, casual and zero-hours contract workers, fixed-term contract workers and self-employed constructionworkers had no access to an employer’s pension scheme and had made no provisionfor themselves.

7.4 Making explicit ‘trade-offs’ between employment and self-employment

Some respondents explicitly identified with the idea of a ‘trade off’ between thestability and security of employee status, on the one hand, and the greater autonomyof self-employment. Freelance workers and the self-employed contrasted the‘control’ to which they had had to submit when they were employees, with the greaterfreedom but also the responsibility which being self-employed entailed:

‘The advantages of being employed over self-employed are obvious in thatyou’ve got a regular income coming in and the buck doesn’t stop with you!Although I’ve always had fairly senior positions, there was always somebodywho I could offload on to, if you like. And so there were advantages in that. Iwas made redundant once when the company closed down… it wascompletely out of my hands and I don’t like that. I like to be in control, andthat’s the advantage of being self-employed - I was in control. And of course,I’ve worked for large companies and small companies.’ (Case Study 8, childminder.)

‘The only good thing about working for an employer is that you don’t take anyof the strain, you start work at 8.30 and you finish at 5.30 - you don’t have toworry about what happens overnight. Here, I sort of think “Oh, you know,who’s got the keys to the next venue”, because we swap around, and liketoday, I was worried about [XXX] because she was very quiet this morningand I thought “Oh, I’ve upset her”.’ (Case Study 9, health promotion worker.)

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The downside of being self-employed was, according to one respondent, ‘being poor’but the advantages included: ‘you do the job and as long as you’re doing the job,people don’t worry about what you’re doing at that precise moment they walk pastyour desk’ (Case Study 5, freelance author and editor).

For employees, the advantages included stability and predictability of income, andalso the fact that the employer is prepared to take on certain responsibilities. Thefollowing comment was made by an agency worker (who considered herself to be anemployee of the agency although her status was probably unclear, see chapter 6above):

‘The agency is responsible for you and they are employing you in fact, not theperson they send you to. So if there is a problem, the agency is duty bound tosort it out… Presumably if something happened to you at a place of work, youfell down the stairs and broke your leg, it would be the agency’s problem.Their responsibility is to me as mine is to them.’ (Case Study 6.)

The downside of being an employee, however, was not simply a degree ofinflexibility over working arrangements, but also, in many cases, the lack of anycompensating security:

‘As an employee you have set times and you are tied down to that job and inall honesty employers mess you about, because they know that if they were toget rid of you within a matter of days they could get someone else doing thesame job. So they don’t care for the worker like they should because theyknow there is someone there to replace them and that is one of the reasonswhy I set up on my own. I used to always get laid off at Christmas time.’(Case Study 24, self-employed builder.)

7.5 Conclusion

The qualitative wave provided evidence on individuals’ reasons for choosingparticular forms of work and their perceptions of flexibility and autonomy, on the onehand, and of insecurity and risk, on the other. Some respondents saw the advantagesand disadvantages of particular forms of work in terms of trade-offs betweenflexibility and security, suggesting that they exercised a degree of choice in weighingup which form of work to adopt. In numerous cases, however, the choice of non-standard work was seen as influenced and constrained by external pressures, the mostimportant of which were family commitments, retraining costs, age and disabilitydiscrimination, and the lack of availability of alternative work. In particular, forthose with family obligations, it was a matter of necessity to find employment whichoffered them the opportunity to arrange their work around domestic commitments.Those returning to employment after a period of unemployment or after familycommitments chose non-standard work because of the costs of acquiring or re-acquiring skills of the kind needed for a more stable and permanent position. Therewas a perception that it was easier for older workers to get employment with anagency than with an employer looking for a longer-term commitment.

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Although many respondents clearly identified particular advantages anddisadvantages with the form of work in which they were engaged, there was ablurring of the division between standard and non-standard work, and betweenemployment and self-employment. Hence self-employment could result in aconsiderable restriction of personal autonomy in practice and to long and intenseworking hours, thanks to the need to meet tight deadlines and maintain reputationwith clients. Employees in non-standard employment, conversely, commented ongrowing insecurity and stress caused by uncertainty over their future job prospects.Both employees and the self-employed reported being affected in different ways byfinancial insecurity. Agency workers and the self-employed often had no access topension schemes, and this was also a problem for employees working on fixed-termor task contracts.

In short, because the choice of non-standard working arrangements is heavilyconditioned by external constraints, individuals are rarely in a position to make anexplicit trade-off between the advantages and disadvantages of forms of work. Nordoes the legal division between employment and self-employment correspond in aclear-cut way to the perceptions which individuals in non-standard work hold offorms of employment. Many of the social and economic risks for which employmentlegislation makes provision are perceived as being common to both employment andself-employment; these include low pay, insecurity of work, health and safety risksand absence of long-term financial security.

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Chapter 8. Conclusions

This research paper has provided an account of an empirical study into theemployment status of workers in non-standard employment. The principal aims ofthe work were to estimate the numbers of individuals employed in different categoriesof employment (in particular 'employees', 'workers' and the independent self-employed), to identify the sources of uncertainty in the application of legal testsrelating to employee status, and to investigate individuals' perceptions of theoperation in practice of these legal classifications. The study proceeded in twophases: a 'quantitative wave' which consisted of a survey of just over 4,000individuals in employment, which was carried out in January-February 1998; and a'qualitative wave' based on a mix of focus groups and individual semi-structuredinterviews, with the sub-sample of respondents, 36 of whom were interviewed face-to-face and 24 by telephone. These were carried out in the summer of 1998.

8.1 The coverage of employment protection legislation

The concept of the 'worker' in principle allows an extension of the categories ofprotected labour beyond 'employees', to include economically dependent workers whodo not have a regular or stable relationship with an employer. Therefore it could havea potentially significant impact on the position of casual workers, agency workers andzero-hours contract workers. Although the concept is already found in some areas ofemployment law (including the legislation implementing the national minimum wage)there is comparatively little case law on the meaning of the term 'worker'. However,on the basis of the existing case law it seems likely that the two criteria which will bemost important are whether the individual contracts to supply his or her personalservices, and whether they are economically dependent to a significant degree uponthe employer.

8.2 Estimating numbers employed as 'employees' and 'workers' in GreatBritain

The quantitative survey estimated that around 86 per cent of all those in employmentin Great Britain consider themselves to be employees, while around 13 per centcategorise themselves as self-employed. It also found that non-standard working -defined to include employment under a contract for a fixed-term or task, casual work,homeworking, agency temping, seasonal work, work as an apprentice or trainee, andwork under zero-hours contract - is much more prevalent among the self-employedthan among employees, and is slightly more prevalent among those working part-timethan among full-time workers.

It was also found that estimates derived from the Labour Force Survey maysignificantly understate the numbers employed on non-standard work, in particularfixed-term employment. This is because the LFS is not picking up a large number ofindividuals who regard themselves as being permanently employed even though theyhave a fixed-term contract.

An initial set of questions asked respondents about the nature of their work in such a

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way as to identify individuals who were likely to have ambiguous status. On the basisof replies to these questions, it was estimated that around 64 per cent of respondentswere clearly employees and 5 per cent were clearly self-employed. This left 30 percent who had an employment status that, on first inspection, had elements ofuncertainty and was not completely clear. They were made up of two groups: thosedefining themselves as self-employed, but who were not directors or partners in theirown business, and who did not employ others; and those defining themselves asemployees who had some type of non-standard working pattern or classified their jobsas non-permanent.

The quantitative stage went on to ask the respondents with some ambiguity in theirstatus a series of questions designed to replicate the type of issues which a court ortribunal would focus on when making an assessment of employment status. In orderto analyse precisely the status of individuals in this 'unclear' group, the focus wasplaced on answers to two sets of questions. The first set of questions concerned thenumber of employers for whom they had worked in the previous six months (a testgiving some indication of the degree of economic dependence). The second set aimedto determine whether individuals were in business on their own account (the'economic reality' test). This second category of questions asked whether theindividual could hire others to work with or for them, whether they were paid a wageor salary or through some other form of remuneration, whether they paid their ownincome tax and National Insurance contributions or whether they were deducted atsource, and whether they were entitled to sick leave and/or annual paid holiday leave.

On this basis, it was estimated that 80 per cent of all individuals in employment wereclearly either employees or dependent 'workers'; 7 per cent were clearly independentlyself-employed; 1.3 per cent were in government training schemes or were unpaidfamily workers; and 12 per cent had a status which was still unclear.

In other words, the numbers of 'workers' who would be covered by the extendeddefinition of dependent labour - the definition used, for example, in section 230(3) ofthe Employment Rights Act 1996 and also under the National Minimum Wage Act1998 - ranges from between 80 per cent to 92 per cent of the working population.Those in independent self-employment who are outside the scope of this extendeddefinition range from between 7 per cent to 19 per cent of the working population.The range of numbers in each category is caused by the uncertainty in knowingprecisely how courts and tribunals will apply the relevant legal tests in practice.

This suggests that by using the 'worker' definition, the number covered byemployment rights might be higher than the 87 per cent who believe that they areemployees according to the LFS. Thus, the use of the worker definition might protectup to a further 5 per cent of all those in employment (or about 16 per cent of thosewhose employment status is unclear because they are employed in non-standard workof some kind).

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8.3 Verifying the survey

The qualitative wave was used initially to assess the validity of the findings from thequantitative wave and to assess the effectiveness of the questions used. It was foundthat a number of respondents had not followed the exact definitions given during thequantitative wave. For example, rather than basing their answers to the question ofwhether they were in a permanent employment relationship on the nature of thecontract which they had with their employer, some answered on the basis of their ownpersonal intentions with regard to their present employment, and some in terms ofwhether they thought continuing employment was practical or possible.

Overall, findings from both waves of the research suggest that, given the normal LFSdefinitions of atypical or non-standard work and the current routing of the questions,the numbers employed in some groups may be overestimated - for example seasonalworkers - while others may be greatly underestimated - for example the numberemployed on fixed term contracts.

It is possible that better survey items might be developed which would be morereliable in testing for employment status. However, it seems that a large part of theunreliability of these questions is caused by the inherently complex nature of theeconomic relationships which they are attempting to describe.

8.4 Identifying sources of uncertainty in the application of legal tests of status

Evidence from the qualitative wave of the research suggests that there are a number ofsources of uncertainty in the application of the rules governing employment status. Aprincipal difficulty lies applying the 'mutuality of obligation' test, which depends onmaking inferences of contractual intention from a wide body of evidence. Furtheruncertainty derives from the widespread use by employers of contractualdocumentation containing 'waiver' or 'relabelling' clauses purporting to determinestatus. A further problem here is the use of terms denying that the employer has anobligation to provide work to the worker ('status-denying clauses'). Contractualdocumentation, in particular for agency workers, reflects attempts to draft terms andconditions in such a way as to minimise the likelihood that a court will find that therewere mutual commitments to accept work and to provide it.

A problem is also associated with the growth of certain forms of work which areparticularly subject to uncertainty as a consequence of the mutuality of obligation test,in particular agency work and zero hours working. Discrepancies between self-perceptions of employment status and assessments made on the basis of the testsapplied in the courts were greatest in the case of agency and zero-hours contractworkers.

8.5 Employment status and the experience of non-standard work

The evidence from the qualitative wave suggests that while individuals in non-standard employment exercise a significant degree of choice over the form of theiremployment, several factors are widely seen as conditioning that choice: these include

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the need to fit in with family arrangements; the costs of retraining following timespent out of full-time work; the time and complexity of setting up a business;discrimination by reference to age, gender and disability; and the lack of availabilityof regular work.

Many individuals employed in non-standard work see autonomy and flexibility asdesirable aspects of self-employment, on the one hand, and regard some degree ofcontrol and commitment as a part of employment as an employee on the other.However, the nature of these associations is complex and the divide betweenemployment and self-employment is not always clear-cut. The independently self-employed as well as freelance workers can be subject to considerable control from aclient or user, in the sense of being unable for economic reasons to refuse work;agency workers and zero-hours contract workers rarely exercise any legal right theymight have to turn work down.

Perceptions of insecurity are common to both employees and the self-employed, andare not consistently associated with one form of work as opposed to another.Insecurity is seen as increasingly significant by employees in professions or jobswhere employment had previously been secure. Employees in agency work and zero-hours contracting, in particular, see themselves as vulnerable to summary dismissal.Some self-employed workers have the possibility of building a reputation amongclients which will counter uncertainty over the demand for their services, but forothers self-employment is associated with chronic insecurity and low incomes.

More generally, evidence on the individuals' experience of non-standard worksuggests that the legal division between employment and self-employment does notcorrespond to perceptions of a clear divide between these different forms of work. Inthe context of non-standard work, there is considerable ambiguity in the notions ofcontrol, autonomy and mutuality of obligation which have been used as guidelines bythe courts in the assessment of employment status.

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Bibliography

Atkinson, John 1985. Flexibility, Uncertainty and Manpower Management. Brighton:Institute of Manpower Studies.Beatson, Mark 1995. Labour Market Flexibility, Employment Department ResearchSeries No. 48. London: HMSO.Brodie, Douglas 1998. ‘The contract for work.’ Scottish Law and Practice Quarterly, 2,138-148.Casey, Bernard, Hilary Metcalf and Neil Millward 1997. Employers’ Use ofFlexible Labour. London: Policy Studies Institute.Cave, Katherine. 1997. Zero Hours Contracts - A report into the incidence andimplications of such contracts. University of Huddersfield.Collins, Hugh. 1990. Independent Contractors and the Challenge of VerticalDisintegration to Employment Protection Laws Oxford Journal of Legal Studies 10,353-380.Deakin, Simon. 1998. ‘The Evolution of the Contract of Employment 1900-1950: theInfluence of the Welfare State.’ In N. Whiteside and R. Salais (eds.) Governance,Industry and Labour Markets in Britain and France. The Modernising State in theMid-Twentieth Century. London: Routledge.Deakin, Simon and Gillian S. Morris 1998. Labour Law. 2nd. ed. London:Butterworths.Department of Trade and Industry 1998. Fairness at Work. Cm. 3968. London: TSO.Kahn-Freund, Otto 1951 ‘Servants and Independent Contractors’ Modern Law Review,14: 504-509.Gibbs, Anita. 1997. ‘Focus Groups.’ Social Research Update, 19.Leighton, Patricia. 1983. Contractual Arrangements in Selected Industries. Departmentof Employment Research Paper no. 39. London: Department of Employment.Leighton, Patricia. 1984. ‘Understanding Employment Contracts.’ Industrial LawJournal, 13: 86-106.Leighton, Patricia. 1986. ‘Marginal Workers’. In Roy Lewis (ed.) Labour Law inBritain. Oxford: Blackwell.Hakim, Catherine. 1990. ‘Core and Periphery in Employers’ Workforce Strategies:Evidence from the 1987 ELUS Survey.’ Employment, Work and Society, 4, 157-188.Hunter, L., A. McGregor, J. McInnes and A. Sproull 1993. ‘The “Flexible Firm”:Strategy and Segmentation’, British Journal of Industrial Relations, 31, 383-407.Hunter L C & McInnes J, Employer Labour Use Strategies - Case Studies, 1991, EDResearch Paper, No 87.McGregor Alan and Sproull Alan, Employer Labour Use Strategies, Analysis of aNational Survey, 1991, ED Research Paper, No 83.Pollert, Anna (ed.) 1988. Farewell to Flexibility? Oxford: Blackwell.Rubery, Jill, and Frank Wilkinson (eds.) 1993. Employer Strategy and the LabourMarket. Oxford: Oxford University Press.Wedderburn, Lord. 1986. The Worker and the Law. 3rd. ed. Harmondsworth:Penguin.Wood Douglas, Employer Labour Use Strategies - First Report on the 1987 survey,1989, ED Research Paper ;No 63.

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Appendix 1 Glossary of Terms

Legal definitions

Employee: an individual who is employed by another under a contract of employment.

Self-employed: an individual who provides labour to another, normally under acontract for services, and who may or may not be in business on his or her ownaccount (also referred to as an independent contractor).

Worker: an individual who (1) is employed by another either as an employee or as anindependent contractor, and (2) is economically dependent to some degree on thebusiness of the other, in other words, is not in business on his or her own account.

Other terms

Agency worker: an individual whose labour is supplied to another on a temporarybasis through an employment agency.

Borderline self-employed: an individual whose legal status (employee or self-employed) is unclear.

Casual worker: an individual employed by or supplying labour to another under anirregular or informal working arrangement.

Dependent self-employed: a self-employed individual who is not in business on his orown account (and is therefore, in legal terms, a ‘worker’).

False self-employed: an individual whose working arrangements, from an objectivepoint of view, are those of an employee, but who maintains (or whose employermaintains) that he or she is self-employed.

Fixed-term contract worker: an individual employed by another under a contract for afixed term of weeks, months or years.

Independent self-employed: a self-employed individual who is in business on his orher own account (and is therefore not, in legal terms, a ‘worker’).

Non-standard employment. Employment which in some respect departs from the so-called 'standard' model of regular employment under a contract of employment for anindeterminate or indefinite duration. A non-exhaustive list of non-standardemployment includes agency employment, casual employment, fixed-termemployment, seasonal employment, self-employment, task employment, employmentas a trainee or on a government-funded employment programme, and zero-hourscontract employment.

Part-time worker: an individual who is employed to work for less than the normalworking week in the establishment in question.

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Seasonal worker: an individual employed to work for a particular part of the year,normally in the context of a specific task or job or for a fixed period of time.

Task worker: an individual employed by another for the duration of a particular task.

Trainee: an individual undergoing training with an employer and/or on a government-sponsored training programme.

Zero-hours contract worker: an individual who supplies labour or services to anotherwhen called upon to do so, but who has no guarantee of work and no regular workinghours.

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Appendix 2

Questionnaire used for the quantitative survey

The survey will have established economic activity/working status in an earlierquestion with the following options:

1. Full-time2. Part-time3. Retired4. Still at school5. In full-time higher education6. Unemployed and not seeking work7. Unemployed and seeking work

All those who say they are not working (i.e. 3 to 7) are filtered out.

Introduction

We are doing some research on behalf of the Department of Trade and Industry intothe different arrangements under which people work, whether for clients, employersor agencies. The aim is to look at whether people in different circumstances arecovered by employment protection legislation, such as the right to redundancypayments. I would like to ask a few confidential questions about your employmentstatus in the work you are currently doing. If you have more than one job at themoment, we are interested in your main job.

All in Work (i.e. answered 1 and 2 to activity question above)

1. Which of these describes your work:

1� I am an employee2� I am self-employed or employee of your own business3� I am on a government scheme4� I am an unpaid family worker

All those who answered 3 or 4 are filtered out of survey.

2. Can I just check, which of these best describes your current situation? (Pleaseremember I am interested in your main job if you have more than one):

1� I am paid a salary or wage by an employer2� I am paid a salary or wage by an agency3� I am a sole director of my own limited business4� I am running or am a partner in a business or professional practice5� I work for myself6� I work as a sub-contractor7� I do freelance work

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8� DK9� Refused

All those who answered 3 or 4 to question 2 are filtered out of survey.

Self-employed ( answered 1 to question 1 and 5 to 7 to question 2) OR (answered 2to question 1)

3. Do you have people working for you?

1� Yes, paid workers or employees2� Yes, unpaid family members or friends3� No, I work on my own4� Don’t know

All those who answered 1 to question 3 are filtered out of survey.

4. Leaving aside your own personal intentions and circumstance, is your job:

1� A permanent job2� There is some way that it is NOT permanent

5. Is your work best described by any of the following:

1� seasonal work2� under contract for a fixed period or a fixed task3� agency temping4� casual type of work5� homeworking (i.e. you home is you main place of work)6� under a zero-hours contract7� as an apprentice or trainee8� none of the above

6. Do you have a written contract of employment or another document, fromyour employer or agency, which sets out your terms and conditions in someway?

1� yes2� no3� don’t know

Those answering 1 to question 4 and 8 to question 5 are filtered out of the survey.

7. Which of these best describes the sort of work you do? (If you are not sure,please choose the category which you think comes closest and I will show yousome more information to help you decide)

code to Standard Occupational Classification

8. More detailed coding if necessary

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9. Approximately, how many individual organisations/agencies have you workedfor in the last 6 months?

(for agency workers this means the number of agencies)

1� one go to question 92� between two and five go to question 103� over five go to question 104� don’t know go to question 10

10. And about how long have you been working for this organisation or agencywithout a break apart from holidays or sickness?

1� Less than one year2� One to two years3� Over two years

11. When you are working for a particular client, organisation or agency, are youallowed to take on work from other clients, organisations or agencies, or not?

1� yes, am allowed2� no, not allowed3� don’t know

12. Can you refuse the work offered to you by the clients, organisations oragencies you work for?

1� yes2� no3� don’t know

13. In your current work, are you free to hire other people, who answer to you andare paid by you, to do the work you personally have taken on, irrespective ofwhether you need to?

1� yes2� no3� don’t know

14. At work, are you covered by the grievance and disciplinary procedures of yourclients, organisations or agencies you work for?

1� yes2� no3� don’t know

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15. In your current work, do you have to provide the main items of equipment youneed to do your job, not just the small items many employees provide forthemselves such as pens and so on?

1� yes2� no3� do not need any equipment4� don’t know

16. When you are at work, does someone have the right to tell you, at any time,what to do or when and how to do it, even if this rarely happens in practice?

1� yes2� no3� don’t know

17. Which of the following best describes how you are paid?

1� by an monthly salary2� a weekly wage3� commission or profit sharing only4� a fee agreed in advance5� by the piece (i.e. piece rates)6� a time rate (by the hour or by the day)7� other

18. Do you pay your own NI or tax or is this usually deducted by theorganisation(s) you work for i.e. your client, employer, agency etc.?

1� pay own NI and tax2� NI and Tax is deducted by organisation3� don’t know

19. Are you entitled to receive sick pay or paid holidays from the organisation(s)you work for i.e. your client, employer, agency etc.?

1� yes2� no3� don’t know

20. What is the main reason for you working in the way that you do?

1� my own preference2� my employer’s\clients preference3� it was the only basis on which work was available4� some other reason

21. The DTI would like to do some more research into the way people areemployed and whether they are covered by employment protection legislation.

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Could we give your details to another researcher who would like to ask you alittle more about the work that you do?

1� yes2� no3� don’t know

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Appendix 3

Aide mémoire for individual interviews

1. Nature of the job

Please describe the kind of job you do.

How long have you been doing this job?

How many employers have you worked for over the past three years?

Do you currently have more than one job? If so please describe your other jobs.

Which of the jobs you do, if any, is your main job?

What do you most like/dislike about your job/jobs?

2. Flexibility

How free are you to decide:

when you work

the number of hours or days a week/month/year you work

how fast you work

where you work

who you work for

how many people you work for

when to change jobs

Is it important to you to be able to decide these things?

3. The people you work with

Do you work as part of a team?

Or on your own? Please give details.

If you work with others, are they employed in the same way as you? Or differently?

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[For example: if respondent is temporary, are the others permanent? If casual, arethe others regular? If part-time, are the others full-time? etc.]

Do you hire other people?

Do they work for you or for somebody else in the organisation or company?

4. Pay

How are you paid?

Who is responsible for paying you?

Who, in your view, should be responsible for paying you?

[prompt for agency workers: who pays them: the agency or the client/user? Whodoes the worker think should pay him or her?]

Do you receive: holiday pay, sick pay, maternity pay, lay-off pay?

Are you paid a fixed wage per week/month/year?

Are you paid by the hour? or on piece rates? or by some other means...

Are you paid in the form of a fee? or profits?

Do you bill for your services using e.g. an invoice?

Can you choose how you are paid?

Would you rather be paid differently from how you are paid now? If so, why?

Is your tax paid for you by your employer or another person? Or do you organiseyour own tax? Are you content with the present arrangement or would you like tochange it?

5. The employment relationship

Do you work mainly for one person/organisation or for more than one? Pleaseexplain.

Are you under an obligation to work exclusively for one person or organisation?

Is it your responsibility to find work or does your employer find it for you?

Can you refuse to work if the employer asks you to?

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What happen if you do refuse work?

Are you on call? If so please give details. [e.g.: are you contacted by letter or byphone?]

Are you an agency worker? If so please give details.

Are you a franchisee? If so please give details.

6. Are you your own boss?

Do you see yourself as self-employed?

or as your own boss?

Do you own your own tools or equipment?

If so can you use them for more than one job or for more than client or employer? Orare there any constraints on how you may use them?

Have you invested your own money in your trade, profession or business?

Do you arrange your own tax and national insurance?

Can you set expenses off against your income or profits?

Do you think that you would be better off if you worked for somebody else as theiremployee?

7. Setting up a business

Have you considered setting up in business?

If so, how difficult was it to obtain funds or capital from a bank or other funder?

How did you deal with the tax and financial aspects of setting up your own business?

Were the following major obstacles: complexity of regulations; financial risk; threatof bankruptcy?

8. Security

How important to you is security or stability in your work, in the sense of having:

a secure and regular income

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a pension

safe and good working conditions

a career structure?

Whose responsibility is it to look after a regular income, pension, health and safety: isit you or your employer?

9. Choice

Did you choose to become an employee, or a self-employed person?

[prompt for security, stability, flexibility, autonomy, tax/NI]

If you are an employee now, have you ever been self-employed? [or vice versa?]

What were the reasons for this?

Were your parents/anybody else in your family/close friends self-employed?

If you are an employee now, would you rather be self-employed? [or vice versa?]

Why?

[prompt for role of gender, family responsibilities, ethnic group, age]

10. Documentation

Has your employer given you written documentation about your job?

If so, is it:

Contract of employment

Written statement of particulars of employment

Wage slip

Invoice

other [please specify]

If no, has your employer ever given you any information about your job verbally?

Do you think he should have done?

If yes, what is this document for?

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Does the document help to tell you what your employment rights and responsibilitiesare? Or what your employer’s rights and responsibilities are?

Does it make reference to a grievance and/or disciplinary procedure?

Or to a collective agreement?

other [please specify]

Does it help to tell you whether you are employed as an employee or if you are self-employed?

Would it help you, do you think, in the event of a legal dispute?

11. Status

Have you ever been concerned that your employment status is not clear?

or that your rights in relation to employment are not clear?

if so why?

in what context: employment rights; social security rights; tax; health and safety; etc.?

have you ever consulted any one of the following about your employment rights:trade union [prompt for information about whether they are or have been a member ofany trade union]; company or staff association; citizens’ advice bureau; solicitor orlegal advice centre; any other person (please give details)?

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Appendix 4

Codes for the categorisation of information from the interviewee transcripts

Code Descriptionage how far did the respondent see their age

as affecting their choice or situation

choice how far being an employee or self-employed was calculative choice

discrepancies how far there were discrepancies in theanswers given at different interviews

dismissal whether the interviewee had experienceof dismissal; whether they had protectionagainst dismissal

documents and contracts any mention made of documentationfamily how far family matters affected the

weighing up of pros and consflexibility how far being an employee or self-

employed was associated with flexibilityof hours, working arrangements, etc.

gender whether the interviewee saw their genderas affecting their choices or situation

getting work whether the interviewee or the employerwas responsible for finding work

grievance and disciplinary procedures whether the interviewee was covered bythe employer’s procedures

health and safety who took responsibility for health andsafety

holidays did the interviewee have the right to paidholidays

hours of work could the interviewee set their own hoursof work or starting and finishing times

insurance and cover did the interviewee take out their ownwork-related insurance or did theemployer provide it

maternity leave was the interviewee entitled to maternityleave

method of payment how was the respondent paidnumber of employers how many employers/clients/users did the

interviewee havepension did the employer provide a pension

schemepros and cons how far individuals weighed up the pros

and cons of being an employee or self-employed

race how far the interviewee saw their race asaffecting their choices or situation

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relationships at work the nature of relationships with fellowworkers

right to refuse work whether the interviewee could refusework offered by an employer or client

risk whether the interviewee associated beingan employee or self-employed with agreater or lesser degree of economic orphysical risk

security whether the interviewee associated beingan employee or self-employed with agreater or lesser degree of security

tax and national insurance did the interviewee arrange their own taxand NI payments or was this done by theemployer

training did the interviewee receive training fromthe employer

uncertainty uncertainty in whether the intervieweesaw themselves as an employee or self-employed; or uncertainty as to their legalstatus

working as part of a team whether the interviewee workedalongside other workers