Linda Hynes, employment lawyer with Ogier Leman writes a monthly feature for Legal-Island email subscribers providing handy precedents and checklists for subscribers to download and use.
This month’s topic focuses on independent contractors and Linda has compiled a checklist to guide Legal-Island subscribers on the factors to be considered when deciding if a contractor is really an employee.
Due to the current economic climate, people who may have been previously happy to maintain their status as independent contractors and may now seek to be viewed as employees in order to avail of employment law protection. The distinction between an employee and an independent contractor is of critical importance for both the person providing the services and the company/person using the services.
If the services are provided by an independent contractor then the relationship is purely commercial and any termination of the contract can only be disputed as breach of a commercial agreement. This is costly and time consuming as it must be brought to the civil courts and the onus is on the side claiming the breach to prove it.
However, if a person can be recognised as an employee rather than an independent contractor then they can potentially take claims for unfair dismissal and redundancy payments and a whole raft of other legislation that is only applicable to employees. Therefore a company considering a services contract must be careful that the relationship is clear from the start and the lines do not become blurred over time.
While the checklist is a guide only it is useful in ascertaining if there is potential for a contractor to argue that they are an employee. Companies should be mindful of these issues when dealing with contractors on a day to day basis and when preparing the documents that will govern their relationship with the contractor. Always remember that it is the situation as a whole that will be looked at and not just the tax status of the contractor or the documents in place between the contractor and the company.
Click here to access the checklist on independent contractors.
This publication is for guidance purposes only. It does not constitute legal or professional advice. No liability is accepted by Ogier Leman for any action taken or not taken in reliance on the information set out in this publication. Professional or legal advice should be obtained before taking or refraining from any action as a result of the contents of this publication. Any and all information is subject to change.