The status of contracted workers, for example those engaged on labour-only subcontracts or on a quasi-self employed basis has been a vexed issue for many years. Historically the main concern was whether a contractor might be an employee for unfair dismissal or taxation purposes. However over recent years business has had to contend with the more difficult issue of whether such a contractor might be a “worker” for the purposes of employment protection legislation.

The definition of a “worker” includes employees but also covers others where they work under a contract whereby they undertake to do or perform personally any work or services for the other party whose status is not by virtue of the contract that of a client or customer of any professional business undertaking carried on by the contractor. The purpose of the definition is to extend certain employment protections to those who, whilst not employees, are in need of some protection.

Consideration of what this means for business has most notably occurred in relation to the Working Time Regulations 1998 and the issue of holiday pay and under the National Minimum Wage Act 1999. The impact of the extension of rights is seen across business as a whole but is particularly apparent in certain sectors, including the construction, home improvement, finance and direct sales sectors. Many of the recent cases have arisen in the construction sector and look at the situation of labour- only subcontractors or those “on the lump”.