The Employment Relationship

The Employment Relationship

Main standards • Employment Relationship Recommendation, 2006 (No. 198) • Private Employment Agencies Convention (No. 181) and Recommendation (No. 188), 1997

Preamble R198 • Considering that the protection of workers is at the heart of the mandate of the International Labour Organization, and in accordance with principles set out in the ILO Declaration on Fundamental Principles and Rights at Work, 1998, and the Decent Work Agenda, and • Considering the difficulties of establishing whether or not an employment relationship exists in situations where the respective rights and obligations of the parties concerned are not clear, where there has been an attempt to disguise the employment relationship, or where inadequacies or limitations exist in the legal framework, or in its interpretation or application, …

Changes to the employment relationship • Changes in the world of work, and particularly in the labour market, give rise to new forms of relationship which do not always fit within the parameters of the employment relationship as defined in law. • This has increased flexibility in the labour market, but • it has also led to a growing number of workers whose employment status is unclear and who are consequently outside the scope of the protection normally associated with an employment relationship.

Has resulted in situations in which the legal scope of the employment relationship (which determines whether or not workers are entitled to be protected by labour legislation) is not consistent with the realities of working relationships. • So many workers who should be protected by labour and employment law are not receiving that protection in fact or in law.

Changes arise fromglobalization • Many situations in which the legal scope of the employment relationship did not accord with the realities of working relationships, arise from globalization. • Changes in workers´ status and mass redundancies, especially in developing countries or those in transition, are frequently related to major financial crises, external debt, structural adjustment programmes and privatization.

Many enterprises have organized their activities so as to utilize labour in increasingly diversified and selective ways, including various kinds of contracts, the decentralization of activities to subcontractors or self-employed workers, or the use of temporary employment agencies.

Often legitimate – or not • Recourse to various types of employment is in itself a legitimate response to the challenges faced by enterprises, as well as meeting the needs of some employees for more flexible work arrangements. These various types of work arrangements lie within the framework of the employment relationship. • But there are civil or commercial contractual relationships under which the services of self-employed workers may be procured, but on terms and conditions which differ from those within an employment relationship.

Repercussions of the lack of protection • Above all the lack of labour protection has adverse consequences for workers and their families. • These changes affect women more than men. • Workers in these situations not only lose their rights under labour law, but also have difficulty securing the protection of the competent inspection services or seeking redress through the labour courts. • In many countries, they are completely excluded from or on the fringe of social security protection and receive less favourable benefits than those workers recognized as employees.

Harms training • Lack of labour protection can result in the neglect of training, including training for work in environments where there are inherent risks. • Enterprises can be reluctant to invest in training workers who will probably not be with them for long. • The user enterprise is unlikely to train the workers supplied by another firm, except for very specific purposes. Untrained workers are more vulnerable to accidents in the workplace and can hamper the competitiveness of the enterprise. • A lack of investment in training can undermine national competitiveness.

Risks beyond the workplace • The lack of labour protection can also impact on the health and safety of third parties and society in general. • Some accidents, such as those caused by heavy vehicles or major accidents in industrial plants, have caused damage to the environment, as well as injuries and fatalities to third parties. • The link between accident risks and the lack of workers’ protection has also been observed in situations where there is extensive use of subcontracting in improper conditions.

Women particularly vulnerable • 6. Members should: • (a) take special account in national policy to address the gender dimension in that women workers predominate in certain occupations and sectors where there is a high proportion of disguised employment relationships, or where there is a lack of clarity of an employment relationship; and • (b) have clear policies on gender equality and better enforcement of the relevant laws and agreements at national level so that the gender dimension can be effectively addressed. • (Recommendation No. 198)

Policy to protect workers in employment • 4. National policy should at least include measures to: • (a) provide guidance for the parties concerned, in particular employers and workers, on effectively establishing the existence of an employment relationship and on the distinction between employed and self-employed workers; • (b) combat disguised employment relationships in the context of, for example, other relationships that may include the use of other forms of contractual arrangements that hide the true legal status, noting that a disguised employment relationship occurs when the employer treats an individual as other than an employee in a manner that hides his or her true legal status as an employee, and that situations can arise where contractual arrangements have the effect of depriving workers of the protection they are due;

(c) ensure standards applicable to all forms of contractual arrangements, including those involving multiple parties, so that employed workers have the protection they are due; • (d) ensure that standards applicable to all forms of contractual arrangements establish who is responsible for the protection contained therein;

Types • “Triangular” employment relationships occur when employees of a person (the “provider”) work for another person (the “user”). • Best known form is the use of contractors and private temporary employment agencies or other contractors. • This means using the alleged status as an independent contractor to hide the fact that a person in actually an employee • Or using private employment agencies as the employer of record to hide actual employment by the primary user. • Franchising: An enterprise allows another enterprise or a person to use its trademark or product, in principle on an independent basis. However, the franchisee has financial obligations towards the franchiser, which normally exercises control over the franchised business, including its staff.

Faked Government-sponsored internship or training exercises used to procure cheap labour, often imposed on foreigners (Japan, Korea) • Though not strictly within these bounds, part-time work also used to avoid protections and benefits of employment.

Determining an employment relationship-the primacy of fact • Art. 9: …determination of the existence of such a relationship should be guided primarily by the facts relating to the performance of work and the remuneration of the worker, notwithstanding how the relationship is characterized in any contrary arrangement, contractual or otherwise, that may have been agreed between the parties.

Indicators of the existence of an employment relationship (Art 13 R198) • How the work is carried out: • carried out according to the instructions and under the control of another party; • involves the integration of the worker in the organization of the enterprise; • is performed solely or mainly for the benefit of another person; • must be carried out personally by the worker;

is carried out within specific working hours or at a workplace specified or agreed by the party requesting the work; • is of a particular duration and has a certain continuity; requires the worker's availability; • or involves the provision of tools, materials and machinery by the party requesting the work.

Form of remuneration • periodic payment of remuneration to the worker; • the fact that such remuneration constitutes the worker's sole or principal source of income; • provision of payment in kind, such as food, lodging or transport; • recognition of entitlements such as weekly rest and annual holidays; • payment by the party requesting the work for travel undertaken by the worker in order to carry out the work; • or absence of financial risk for the worker.

The Employment Relationship