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Posts Tagged ‘Employee’

A new decision from the Third Circuit Court of Appeals provides public employers with some additional guidance regarding employee internet activity. In the case of Beyer v. Duncannon Borough, police officer Eric Beyer was terminated from his position after he posted anonymous online comments, critical of the Duncannon Borough Council. More specifically, Beyer criticized the Council for its opposition to the purchase of new AR-15 rifles for the police department.

Upon his termination, Beyer filed a lawsuit against the Borough, alleging violation of his  First Amendment rights. Pursuant to the U.S. Supreme Courts decision in Garcetti v. Ceballos, a public employees speech is only protected by the First Amendment if the employee (1) speaks as a citizen (2) on a matter of public concern. Applying this standard, the District Court dismissed Beyers claim, holding that he was speaking in his official capacity as a police officer, not in his private capacity as a citizen. Beyer appealed the dismissal to the Third Circuit.

In reviewing Beyers appeal, the Third Circuit placed significant emphasis on the nature of Beyers speechanonymous internet posts. The Court found that anonymous posting supported both prongs of the Garcetti analysis. First, the Court indicated that anonymous online postings are inconsistent with conduct performed in an official capacity. As a result, the Court found that it was more likely that Beyer was speaking as a private citizen. Second, the Court found that the broad dissemination of Beyers statements over the internet supported the argument that he was speaking on a matter of public concern. Based on the foregoing, the Court reversed the District Courts dismissal.

So, whats a public employer to do? The Third Circuits decision does not prohibit monitoring of employee internet activity pursuant to a reasonable policy. It does, however, limit a public employers ability to discipline its employees for anonymous online activity critical of the employer. Going forward, public employers should be particularly careful of any disciplinary action taken in response to such conduct, and when in doubt consult an attorney.

EMPLOYMENT LAW DISTINCTION BETWEEN ‘EMPLOYEES’ & ‘WORKERS’ AFFECT HOLIDAY & PAY RIGHTS

Affect who the employer is and who is responsible for ones wage or salary, holiday pay, employers contribution to national insurance, pension rights, and employment protection, the legal distinction made between “employees” and “workers”, and between those and “contractors” ~one’s entitlements depend on whether in the eyes of the law one is an employee, or a worker, subcontractor, self employed contractor or partly a freelancer.

Because of their different legal definitions an ‘employee’ or a ‘worker’ in the eyes of the law may be in fact a ‘contractor’ or a ‘subcontractor’, and vice-versa -and employment through an employment agency may or may not itself fall in different category. Definitions and categories affect entitlements.

Many employees lose out on entitlements, because their legal employment category, or because who the law regards as employer, is different than they think or have been told. When one is paid to do work for another it is important to know how the employment contract is formed, and ones employment status.

Are you liable for your income tax or must the employer deduct it and attend to it at source, what are your holiday and pension entitlements and whose responsibility are they, are you entitled to employers part of your national insurance contribution who is your employer at the workplace that you work, the business you work on the premises of, or an employment agency, or is it you whose responsibility those are, in the eyes of the law?

These affect liability, vicarious liability and the statutorily implied terms of any contract -as well as various other statutory requirements ~from equal treatment to employment protection under the employment laws -many have sued and lost because the employer was not in law the sued party but another.

Often these also affect ‘pay’ (in law defined as being what is received directly or indirectly in cash or kind for work done) ~an ‘employee’ gets full holiday pay, paid leave -a ‘worker’ does not.

In employment there is sometimes a company pension scheme; as the norm the employer must pay part of one’s national insurance contributions (covering, e.g., unemployment, health-care, state-pension) if one is an ‘employee’; but the entitlement is partial if one is a ‘worker’, and nil if one is in law a ‘contractor’ -one’s employment status matters.

The following helps ascertain one’s employment status in law, and who in law is one’s employer.

Is one an ‘employee’ or ‘self-employed contractor’? There are three tests that are applied to the question:-

The first is the ‘Control Test’ and is based on this that if the employer controls the job to be done but not how it is done than the person doing the job is an employee; but this test would not be satisfactory, because also to an employee with specialist knowledge, e.g. a company nurse, the employer would not tell how to do the job.

The second, ‘Organisational Integration Test’, seeks to ascertain whether the person paid is an integral part of the business: an anaesthetist was not a self-employed contractor in Cassidy -v- The Ministry of Pensions 1961 ~he was a resident of the hospital -an employee.

But this did not suffice: drivers who were paid for an agreed minimum number of jobs per year and had to wear company uniforms as well as to have the company colours on their lorries and who could not work for the competition without the employer’s permission, but who could choose to do extra work and decided their own routes and used their own lorries and could use at their pleasure substitute drivers, in Ready Mixed Concrete -v- The Ministry of Pensions 1968 were self-employed contractors, not employees.

There is a third, the ‘Multiple Test’ to be applied: ‘one is an employee if.. provides work or service for remuneration.. the business has some degree of control.. without any terms contrary to the employment relationship.’

This is the consideration in the case of those engaged or introduced by employment agencies:-

Who is the employer? Is one, as a specific individual, under the direct supervision and control of the business? If so, one is an employee of the client business -where one works…

Does the business where one works pay that agency and that agency itself pay one? If so, one is not an employee of the client business, but may be an employee or worker of that agency itself -agency staff.

Employees normally receive holiday pay, self employed contractors do not ~but what about the ‘worker’-the casual worker who is not in self employment and yet is also not a regular employee?

Is one an ‘employee’ or ‘worker’? There is a different ‘worker’ category for casual workers which was created under the Employment Rights Act 1996 s.230 (3) to deal with this question.

If a casual worker is genuinely on an ad hoc basis employed, that casual worker is, in law, an employee while he is employed, and for the period/s of such employment has employment rights -e.g., to receive wages and holiday pay.

A ‘subcontractor’ normally would be in the category either of employee or of worker on the same basis, but instead of the business where the sub contractor works, of the self employed contractor who engaged the sub contractor.

If there is a dispute about whether a contractor engaged a subcontractor as a self employed person, then the same three tests above are applied to ascertain the employment status of that subcontractor in relation to that contractor.

If that subcontractor receives a wage and is not self-employed in relation to that contractor, then if the subcontractor works regularly for that contractor he is an employee of that contractor, and if he works casually for that contractor he is a worker of that contractor.

Being a ‘freelance-worker’ is, to all intends and purposes, the same as being a self-employed contractor.

One can lawfully be both: an employee or worker, as well as a freelancer -self employed.

If one who is normally an employee or worker wants also to do some freelance work, then one officially is an employee or worker and one’s entitlements in relation to ones normal status are not affected -but those entitlements do not extend to one’s freelance work and employment.

If one normally self employed wants also to do some work as an employee or worker of a business, then one’s official status as self-employed does not change -but one’s entitlements for work done as an employee or worker are not affected to the extent of one’s such work.

If one is not paid for holidays.. if a pension scheme depends on whether one is a freelancer or not.. if the employer is responsible for one’s colleagues’ taxes or pension contributions but not one’s own.. if one is working for one business but is paid by another one might need to ascertain one’s employment status -the above are the legal tests.

(Laws change always ascertain current law.)

When there is a doubt over status of a worker being an employee or self employed the employer must make the correct decision or face potential serious penalties relating to a change in status that can be applied retrospectively. In the absence of comprehensive legislation guidelines have emerged and must be applied to avoid potential unexpected liabilities of tens of thousands of pounds.

The employment status of a worker can be a veritable minefield for an employer if the wrong decision is made. Should an employer decide the status of a worker is self employed and treat that worker as self employed rather than deducting tax and national insurance the employer could be at risk of incurring a major financial liability for tax and national insurance deductions if the status of the worker is subsequently changed following an Inland Revenue enquiry.

If the status of a worker is changed from self employment to employee by the Inland Revenue the amounts paid to that worker would be regarded by the Revenue as not the gross pay but the net pay after deductions of income tax and national insurance. The re-assessment after adding the income tax and both employee and employer national insurance could increase the cost of that worker by more than 50%.

If a workers employment status is determined as incorrect by the tax authority the date at which the employment status was employee rather than self employment would also be determined. Such a status change and the applicable date could be applied several years retrospectively leading to a significant financial burden.

An employer cannot choose the status of a worker as employee or self employed. The status of the worker is dependent upon the rules of engagement and the working practices that ensue. There is also a tendency with long term engagement of self employed workers for circumstances to change and some changes could change the status of that worker from self employment to employee in the view of the tax authority.

The first essential question to be answered by an employer is whether the worker is being engaged under a contract of employment or whose services are being contracted. Due to the potential serious financial consequences of making the wrong decision it is important that the rules of engagement are set out and agreed in writing.

There is no statutory definition of what constitutes a contract of service and what constitutes a contract for services in relation to income tax and national insurance. In the absence of a statutory definition the interpretation of the nature of the relationship is open to debate and previous court judgments.

General rules which would indicate a worker was an employee would include scenarios such as is the work supervised, does someone state when, what and where work is done and how it should be done. Can the worker be moved from one task to another and does the worker work to set hours and paid on a set basis of hourly, weekly or monthly or receive bonuses or overtime payments. The existence of such conditions would indicate employee status not self employment.

There are many other factors which may determine employment status, for example if the worker takes the business vehicle home each day that would indicate employee status. Should the worker provide his own tools and equipment to perform the tasks and bear the costs of doing this then self employment would be indicated but should the employer provide such equipment then workers status is more likely to be interpreted as employee.

Factors which may determine self employment would include the worker using someone else to carry out the tasks at their expense, whether the work contained personal financial risk to the worker, has a fixed price been agreed regardless of time taken to perform the work. Other self employment factors would be if the worker can choose when and how to perform the tasks, whether they also work for other organisations and whether unsatisfactory work has to be corrected in the workers own time and expense.

The conditions under which a worker is engaged may be ambiguous and that can lead to problems as long term self employed workers and the relationship with the employer tends over time to slip into a pattern that might be interpreted as closer to that of an employee rather than self employment. In such circumstances what may have started as self employment may later be interpreted as employment in which case the specter of that workers cost being increased to the business by 50% going back years could become reality.

In all cases where there is doubt over the employment status the final decision becomes one of providing evidence and the weight of evidence for one side or the other. Often individual cases can rest on what may have been regarded as insignificant items at the time. For example granting the worker benefits normally associated with employment such as paid leave and even such items as access to subsidized canteen facilities could weigh the balance in favour of employment.

If an employer has doubts on the status of a worker the rules of engagement should be set out in writing at the outset and clarify the status as employee or self employment. If there is any doubt then the safest practice would be to treat the worker as an employee and deduct income tax and national insurance or engage the worker under the CIS sub contractors rules.

As a rough guide to the financial consequences of making the wrong decision or circumstances changing the status of a worker from self employment to employment without deducting tax and national insurance consider this example.

The worker has performed work for the business for 3 years as self employed and has been paid 25,000 pounds per annum. The normal work pattern is interpreted by the Inland Revenue as that of an employee not self employment.

The Inland Revenue could determine income tax of 5,000 pounds and national insurance of 2,000 pounds should have been deducted plus employer national insurance of a further 2,000 pounds. Over three years the bill for getting the decision wrong could result in an unexpected bill for the employer of 27,000 pounds. For a small business that level of additional cost could be the difference between survival and liquidation.

Using a Cannon digital camera on “movie mode”, I interviewed some employees after the mission was over, pretending to not be just as dumbfounded as they were. More info on this mission: www.improveverywhere.com

Many of those opening a dollar store have no prior business experience. In fact many have never been involved in staffing or supervision of employees prior to starting their own store. Those who have never supervised before often find all of the demands associated with supervising employees to be overwhelming in the beginning. Some choose to ignore everything and allow other parts of the company to take all their time. Others recognize long term success depends on assembling a skilled team of employees who are all focused on the right priorities, and who all work together to make the business a success. As the team leader you are instrumental in providing the training, leadership and support your employees need to achieve that success.

Read on to discover more. In this article I present 5 important tips regarding employee supervision when opening a dollar store.

Tip #1) Clearly define the tasks associated with each position in your store. It will take some time and effort, but having everything clearly defined will be helpful to you and your employees. Complete this effort prior to even opening your business. Then as new roles and responsibilities emerge, add them to the list.

Tip #2) Document all job roles, responsibilities and expectations you have defined for your employees. These expectations should include general expectations for all employees as well as the expectations associated with a specific position in your firm. Be sure to communicate all expectations to your employees prior to holding them accountable to those expectations.

Tip #3) Measure employees against documented and communicated expectations. If youve done a good job of documenting everything and then clearly communicating everything, you will find the majority of employees will be doing everything possible to meet your expectations. They want to do a good job.

Tip #4) Conduct routine face to face meetings with every employee. Dont turn these meetings into a time for you to gripe about performance. A true leader doesnt focus discussions on everything employees do wrong. This is a time to reinforce positive performance and to reinforce the performance you wish to see in the future.

Tip #5) As noted in Tip #4, it is important to focus your meetings on the positive. Focus on providing specific feedback with examples to reinforce doing the right things and the fact that you recognize the employee is doing the right thing. However, if there are areas of concern, or even areas for growth, balance the discussion by providing feedback regarding those areas of performance as well. Discuss performance highlights and lowlights regularly with every employee.

To your success when opening a dollar store!