Employment Status in the Life Sciences Sector: A New Dawn

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Kurt Reilly - Solicitor

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Employment Status in the Life Sciences sector A New Dawn v2

In recent years, working models have become increasingly varied, with organisations routinely departing from traditional employee/employer arrangements.

This is particularly the case for the life sciences industry, which, given the work's project-driven nature, has historically relied upon consultant and contractor staff.

Our Life Sciences and Employment Solicitors explore how organisations in the sector engage staff in various ways in response to staff's increasing demand for more flexibility and control over their work.

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What are the different types of employment status?

The employment law rights and protections an individual is entitled to depends upon their employment status. "Employment status" refers to the legal status of an individual at work.

There are three types: employee, worker, and self-employed. All three carry different rights and entitlements, and each has its own advantages and disadvantages, depending on the nature of the work being undertaken.

Employees are afforded the most legal protection, often being guaranteed a minimum number of working hours.

They also enjoy numerous employment rights and protections (ranging from protection from unfair dismissal to rights to paid holidays and other forms of leave).

Workers have fewer rights than employees but are still entitled to the national minimum wage, paid holidays, whistleblowing protection, and discrimination protection, among other things.

Self-employed arrangements can offer greater flexibility to organisations, where roles are often performed and paid on an ad hoc basis, but they offer very little protection to the individual.

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What are the different types of employment status v2

Control or flexibility?

A common consideration for life science organisations before engaging an individual (on any basis) ought to be whether control or flexibility is the most important factor in the working relationship.

This will likely depend on the nature of the work, the business context, and the individual in any given situation.   

If an organisation engages an individual as an employee, it may seek to include contractual provisions in employment contracts to protect legitimate business interests.

These include intellectual property (IP) clauses, robust confidentiality provisions, restrictive covenants, and prohibiting outside employment.

In relation to IP specifically, this often represents a key consideration for organisations in the life sciences sector, given the innovative techniques and products individuals create and manage in their work.

Employers should be aware that the default position for IP in an employment relationship is that IP generated in the course of work belongs to the employer, though no such position exists for self-employed individuals.

There may be situations in which both control and flexibility are key considerations, in which case, engaging individuals as workers may represent the best option for employers.

Where the need for control may be less important, such as when an individual is simply required for a defined function or limited period, a self-employed engagement may be preferable.

Whether under a consultancy agreement or otherwise, an organisation has no continuing obligation to provide work or pay the individual once the agreed work is complete, ensuring flexibility in the working relationship.

In such circumstances, it will still be worthwhile to seek to protect business interests, though the extent to which this is possible will be more limited than for employees.

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The consequence of mislabeling self-employed individuals

The price of "mislabelling" an individual as self-employed in their contract but treating them as a worker or employee in practice can be steep.

Not only could the individual be owed backdated holiday pay and accrue increased rights and protections, but under separate financial laws, there could also be liability for unpaid tax and National Insurance contributions or for not paying the national minimum wage.

Employers are encouraged to review their relationships with self-employed workers and seek advice if they are uncertain about their status.

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The consequence of mislabeling self employed individuals

Single Worker status – Government Proposals

In May 2024, Labour detailed its plans to "make work pay" by delivering a "new deal" for working people within the first 100 days of government.

The New Deal included a proposal to move to a single-worker status, with the only distinction being between workers and the self-employed.

As the cases of Uber and Deliveroo demonstrate, this is a very complex area of law, and any reform will require detailed and extensive consultation.

The government has acknowledged that such changes are unlikely to happen quickly and has only committed to consulting on this within the next year.

Myerson's future updates on such changes will be published in due course.

Contact Our Life Sciences Solicitors

For legal advice regarding employment law in the Life Sciences sector, contact our Life Sciences team and Employment Lawyers on:

01619414000

Kurt Reilly's profile picture

Kurt Reilly

Solicitor

Kurt has over 2 years of experience acting as an Employment solicitor. Kurt has specialist expertise in disciplinary, grievances, disability processes, employee consultations, redundancies, and TUPE.

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