In this insight we consider what defines an independent contractor and the considerations and potential liabilities employers should be aware of.
Who is an independent contractor?
Independent contractors are self-employed individuals who provide services to another organisation under a contract typically known as a ‘contract for services’. Independent contractors are one example of ‘atypical workers’ or those who do not fit the traditional mould of an employee working full-time for a single employer under a contract of service of indefinite length.
Independent contractors are not considered to be employees and are typically highly skilled, providing their clients with specialist skills or additional capacity on an as needed basis. A self-employed individual provides the employer with his or her services, but remains independent. Typically there may be an ability to provide alternative individuals to carry out the work in question. Services may also be provided through a company. Self-employed workers are not entitled to statutory employment rights.
The scope of this article is not to detail the employment status of someone who might be considered to be an independent contractor but it is important to note that only a court or employment tribunal can make a final decision on someone's employment status and an individual can still be classed as an 'employee' or 'worker' even when they are taxed on a self-employed basis.
Organisations engaging individuals who are genuinely self-employed should still be mindful that just because an individual may not convey the same employment rights as others, there are still some considerations and potential liabilities from an employment perspective.
The general rule is that no liability arises for the negligence or other torts committed by an independent contractor in the execution of the work for which they were engaged. However, there are exceptions to this general rule and the courts may focus on the substance of the relationship rather than the form, for instance in Barclays Bank Plc v Various Claimants  EWCA Civ 1670 the Court of Appeal upheld the High Court's decision that Barclays had vicarious liability for the alleged sexual assaults carried out by a doctor (Dr Bates) who it retained to carry out medical examinations of (amongst others) applicants for employment. This was despite the fact that Dr Bates was an independent contractor.
It should also be noted that a similar outcome to vicarious liability may be achieved by the imposition of a “non-delegable duty” with the result that it is no defence to show that performance was delegated to a person reasonably believed to be competent. At minimum this entails an obligation not only to take care, but also to provide that care is taken by the independent contractor. The law applicable to non-delegable duties was reviewed by the Supreme Court in Woodland v Essex County Council  UKSC 66, and a non-delegable duty is more likely to be found in cases where a respondent has an element of control over the claimant and the claimant is especially vulnerable or dependent on the protection of the respondent against the risk of injury.
Following on from the above, and although the specific rules on third-party harassment were repealed on 1 October 2013, businesses should be mindful of potentially subjecting employees to harassment (see [insert link to Harassment] for further details) at the hands of a third party, for instance an independent contractor. It is at least arguable that an employer's reaction (or lack of reaction) to a third party's harassment of an employee might still amount to discrimination or harassment, particularly when there is a continuing course of offensive conduct, where they have some control but do not take action to prevent it from recurring.
It follows that if an organisation has a particular concern about the engagement of an independent contractor it may be prudent to consider whether any additional steps need to be put into place to protect employees or whether an enhanced Disclosure & Barring Service (DBS) check is required.