Employment Law

Employee v contractors – a reminder

This is a very useful and to-the-point summary on the differences between employees and self-employed contractors. As the author says, it is all about looking at the whole picture of the relationship (“the true nature” as our Employment Relations Act puts it), which of course does not really help. Focusing on the following three key elements does, though:

– can the ’employee’ send someone else to do the work? If yes, they are a contractor.

– can the ’employee’ say no to the work offered? Again, if yes, we have a contractor relationship.

– is the employer in control? This is probably the trickiest criteria. The higher the employee is qualified, the less the employer can and will want to control the employee. What is meant is usually whether there is a place of work and minimum hours of attendance or availabilty. Again, the more the ’employee’ can decide on this, the more they are a contractor.

Also true: the problems and legal concepts are the same in most common law and civil law jurisdictions. In Germany, Courts these days even challenge whether a genuine contractor relationship exists when the contractor is a company. At least in Germany, it has become popular practice to set up ‘independent’ companies which provide ‘contractors’ who do the work previous performed by employees. For far less money.