1. A contract of apprenticeship, under which the apprentice is employed, exists where the apprentice contracts to be taught a trade or calling.1 The apprentice undertakes to serve their ‘master’ for that purpose and the ‘master’ undertakes to teach the apprentice and to maintain them or pay their wages.2 A company (or other corporate body) may take an apprentice. An apprenticeship agreement must be for an agreed fixed period. Apprenticeship agreements must be in writing or else they cannot be enforced.3 The ‘master’ must have responsibility for the training and qualifications of the apprentice. A tripartite agreement, where an employer offers a person an opportunity to train and qualify at an external body such as a school or college may also amount to a contract of apprenticeship.4
2. An apprenticeship contract is a contract of employment under HSWA section 53(1) – see Status of Workers – Introduction section.
3. The legal status of a director is that of an office-holder and an agent of the company. A director could also be an employee, self-employed, or neither. Information identifying a director of any particular company is available from Companies House.
4. Section 318 of the Companies Act 1985 requires companies to keep copies of all written "service agreements" (employment contracts) with directors and written memoranda of oral service agreements (employment contracts) with directors. If a company does not have a written service agreement or memorandum in respect of a certain director, this does not mean that they are not employed. The company might simply be in breach of the requirements of section 318.
5. Executive directors are usually employees of the company. An employee is defined in section 53 HSWA and section 230 Employment Rights Act 1996 (ERA 1996) as a person who works under a contract of employment or a service agreement. If a director works full time for the company and is paid a salary, a court is likely to view the director as an employee 5. This is in contrast to the situation where a director takes on some of the business’s financial risk by receiving fees on a sporadic basis dependent upon the company’s performance. Directors are also required to make declarations of their interests at board meetings 6; such interests should include their employment status. Ultimately, as with other people, employment status will depend on the assessment of all relevant factors. A relevant factor in these circumstances is whether there is a mutual obligation on the company and the director to offer and accept work beyond the duties required of any director 7 .
6. Inspectors will be able to use their section 20 powers, if necessary, to require companies to disclose the service contracts of their directors8 or notes and minutes of meetings9 so that they can be inspected and/or copies taken of them.
7. A non-executive director is more likely to be self-employed, although the circumstances of each case should still be assessed. Self-employed is defined by section 52 HSWA in very wide terms as an individual, who does work for their own gain or reward, otherwise than under a contract of employment, regardless of whether or not they employ others.
8. A further factor is whether a director has a controlling shareholding in the company. If so, it is less likely that they will be an employee because they could block a decision to dismiss themselves or amend their terms of employment10. However, this does not mean that a controlling shareholder cannot be an employee11.
9. In very rare cases, a director’s employment status may fall outside the definition of an employee or self-employed person: he or she may (if receiving some form of remuneration) be a “worker”, being neither employed or self-employed12. The courts will be keen to find an employment relationship or a self-employment status rather than define a person’s status as “worker”. Inspectors should make every effort to find evidence of employment or self-employed (the broad definition of self-employed in section 53 HSWA will assist). See also the guidance below on “workers”.
10. Casual work is where a person undertakes short periods of work, with breaks between each period when no work is offered or done. The two most common types of casual work are:
a situation where casual work is taken on for a short period, such as holiday work for students, when the hours and conditions of the work are stipulated by the ‘employer’, although this is often only verbally; such arrangements would normally give rise to a contract of employment.
11. In either situation, there could, depending on the facts in each case, also be a ‘global’ contract of employment where such mutual obligations exist. The longer the relationship between the parties and the more regular and continuing the work, the more likely it will be that a ‘global’ contract of employment exists.
12. Labour-only subcontracting is particularly common in the building and construction industry . In this situation, the main contractor engages the labour needed on a project by sub-contracting specific jobs to workers (sub-contractors). The legal status of such a worker depends on the normal application of the various criteria listed above. The courts have shown a willingness to overlook the fact that the worker is described as "self-employed", if the other factual circumstances actually point towards employment.
13. In one case 14, a general labourer was engaged by a firm of builders and was expressly told that he was working as part of a "lump" labour force. He was paid an hourly rate without deductions for tax and national insurance, but was provided with tools and was subject to the day-to-day control of the site agent with regard to what to do and where to do it. The court held that the labourer was an employee of the building firm despite the express intention of the parties that he was to be a self-employed labour-only subcontractor.
14. Another common situation in the building and construction industry is where there is an intermediary (such as a gang leader or a sub-contracting company) who contracts with the main contractor for the supply of labour and with the worker for the provision of the labour. In this situation, the worker is likely to be in the same position as temporary or agency workers supplied by an employment agency or business (see below).
15. An employment agency or business may supply the services of individuals to another company (their client) on a temporary basis. The working arrangement is usually for a limited period of time.
16. There are a number of possible employment arrangements for agency workers:
17. If the client company pays the agency for the worker and the agency then pays the worker, this will point away from the worker being an employee of the client company.
18. If the contract between the worker and the agency states that there may be periods when no work is available and there is no obligation on the agency to find work for the worker or for the worker to accept it, this will point away from a relationship of employment between the agency and the worker.
19. However, whether or not the worker actually is an employee will depend on all the details of the relationship between the parties (particularly the terms of the contract document) and the application of the criteria detailed in the Contract of employment section. Employment status must be determined from full consideration of all the evidence: not only any relevant documents but also all the relevant evidence about the dynamics of the working relationship between the parties, including what was said and done.15
20. In one case16, it was held that there was no contract of employment where:
The court considered that the relationship lacked the elements of continuity and care associated with a contract of employment.
21. In another case17, the court held that there was no contract of employment between the agency and the worker where the worker was placed at a client company continuously for three years because the terms of the contract indicated that it was not a contract of employment and it was agreed that there would be periods between assignments where no work would be available.
22. If a company exercises day to day control over an agency worker, case law indicates that even though the agency remunerated the worker there would be no contract of employment between the worker and the agency18.
23. The courts have made clear that agency/temporary workers can be employees of their agency or the company where they are placed. In one case19, it was stated that no general rule existed preventing an employment agency worker from being an employee of the agency. Where, as in that case, the worker's relationship with the agency was governed wholly by a written contract, employment status depended on the court's construction of those terms.
24. There were factors pointing both towards employment:
and factors pointing away from employment:
The court decided that the totality of the terms of the contract created an employment relationship, regardless of the label given by the parties.
25. Employment agencies and businesses have duties under the Employment Agencies Act 1973 and supporting regulations20 in respect of the suitability those seeking work for a particular position and their protection, including a requirement to obtain information on known health and safety risks. This legislation is enforced by the Employment Agency Standards (‘EAS’) Inspectorate21, not HSE, and you should notify the EAS Inspectorate of serious incidents involving agency workers as soon as possible in accordance with OC 84/5. You should continue to deal with the incident in accordance with HSE’s procedures, including conducting an investigation where appropriate. The EAS Inspectorate has agreed to notify HSE if it proposes to take any action, so that it may be properly coordinated with any enforcement action being considered by HSE (see the OC above for further guidance).
26. As stated above, there is a third category of persons in respect of which a duty is held, besides employees and the self-employed – the category of “worker”22. Whilst the HSWA imposes duties on employers towards employees (section 2) and duties on the self-employed (section 3(2)), it does not specifically apply to workers. The employer’s duties in the case of workers would fall within section 3(1) of HSWA. Other specific regulations, however, also place a duty upon a person in control of work, regardless of whether those affected are employees, self-employed or workers (for example, the Construction (Design and Management) Regulations 2007).
27. The category of workers known as “office holders” includes police constables, prison officers, company directors, trustees, members of the clergy, trade union officials, magistrates and club secretaries. An ‘office’ is a permanent post which exists independently of the person who holds it.
28. A worker who holds an office is traditionally not considered to be an employee because their office continues in existence independently of the particular office holder who, for the time being, holds the position. However, there are exceptions to this approach, for example, police officers are office holders but, by virtue of specific statutory provision23, are treated as employees for the purposes of health and safety legislation.
29. However, a person may be both an office holder and an employee at the same time, depending on the application of the criteria set out above.
30. In one case 24 the issue was the employment status of the secretary of a workingmen’s club. The relevant factors were:
31. Volunteers are not employees, so if consideration is being given to proceeding against a dutyholder under section 3 HSWA in respect of risks to volunteers, you need to prove that the duty holder is “an employer”, i.e. that in addition to the volunteers, there is at least one employee within the business/company.
32. If the dutyholder is not “an employer”, you may be able to proceed under section 3(2) HSWA if the dutyholder is a self-employed person (as defined by s.53 HSWA).
33. In addition, section 4 HSWA, which imposes general duties on a person who has control of non-domestic premises, may apply in respect of risks to volunteers (or any other person) who use the premises, or plant or substances provided there.
34. Section 51 HSWA states that Part 1 of the Act does not apply in relation to the employment of domestic servants in a private household. HSE cannot therefore enforce the provisions of HSWA against an employer insofar as those provisions relate to the employment of a domestic servant, nor against the domestic servant him/herself.
35. There is no case law that provides definitive guidance on when an employee is a ‘domestic servant’. The following factors may, however, be considered in deciding whether section 51 might apply: