Employment Status of Volunteers and Case Study

Volunteers can perform a valuable role within schools, offering flexible support that is not motivated by financial reward. Individuals may carry out voluntary work for a variety of reasons – sometimes it will be a ‘one off’ arrangement but it can also be regular.

This note considers the employment status of volunteers (and their associated rights and protections) and explores a case study which demonstrates the legal risks associated with failing to ensure an individual is genuinely engaged as a ‘volunteer’.

Employment Status of Volunteers

Who is a ‘volunteer’?

There is no legal definition of a ‘volunteer’ and no specific legislation covering employer-volunteer relationships. However, in general terms, a volunteer is usually considered to be an individual who, of their own free will, gives their time to support an organisation free of charge and with no expectation of remuneration.

The extent of the rights and protections that volunteers may acquire is dependent on their legal status, meaning whether they are an ’employee’, a ‘worker’ or a genuine volunteer. In particular:

• ‘Employees’ obtain all employment related rights, including full protection in relation to time-off work, the right to claim unfair dismissal and rights in relation to family leave and pregnancy.
• ‘Workers’ do not share all of these rights but do benefit from some statutory protection. For example, workers are protected under the discrimination legislation and from an unlawful deduction from wages. They are also entitled to receive the National Minimum Wage (NMW) (or living wage (as appropriate)), be paid annual leave and take rest breaks.
• ‘Volunteers’, assuming they are genuinely engaged as such, have no employment rights and protections.

How is employment status determined?

Employment status is determined according to factors such as the level of control that the employer has over the way the individual carries out their activities; the requirement that the individual carry out work themselves and not send a substitute (known as ‘personal service’); a mutual obligation for the employer to provide work and the individual to accept that work, and other factors pointing towards an employment relationship, such as financial dependence, exclusivity of the arrangement and payment during holiday or sickness absence.

Worker status is increasingly afforded to individuals providing personal services due to the simplicity of the statutory test. The statutory definition of worker has three key elements:

• a contract whereby an individual undertakes to perform work or services for another party;
• an undertaking to do the work or perform the services personally; and
• a requirement that the other party to the contract is not a client or customer of any profession or business undertaking carried on by the individual.

Whether a volunteer is an ’employee’ or a ‘worker’ will therefore depend on these factors but the question of employment status is not easily defined, and the label given to an individual will not be determinative. Labelling an individual as a ‘volunteer’ will not prevent them from acquiring ‘employee’ or ‘worker’ status if the necessary components of ‘employee’ or ‘worker’ status are established. Instead, an Employment Tribunal will look at both the contractual documents, as well as the arrangements in practice, in order to form an assessment as to where an individual sits in terms of employment status. This is known as a ‘purposive approach’ which seeks to establish the parties’ ‘true intention’. As such, the employment status of volunteers is not clear cut and will often turn on the individual circumstances.

Payments to Volunteers

What can schools pay volunteers?

Schools can reimburse volunteers for reasonable expenses actually incurred (or likely to be incurred).

Where there are payments (other than reasonable expenses) or ‘benefits in kind’, a volunteer will be considered a ‘worker’ who is entitled to be paid, at least, the NMW. The definition of ‘worker’ for the purpose of the legislation is broad. HMRC advises in its ‘National Minimum Wage Manual’ (which can be located here) that, for NMW purposes, a genuine volunteer will typically:

• provide their time and effort completely freely;
• be able to come and go as they please;
• be under no obligation to provide their services; and
• not suffer any sanctions if they do not perform their volunteer duties.

HMRC guidance also states that a one-off gift or reward of a reasonable amount which was unexpected is unlikely to establish NMW entitlement, but regular gifts and rewards should be avoided.

HMRC’s charity volunteers’ guidance states that training is not a ‘benefit in kind’ if:

• it is given for the sole purpose of improving the volunteer’s ability to carry out the role; and
• it is acquired in the course of the voluntary work.

However, training outside of this scope may well be considered a benefit in kind for NMW purposes.

What are the consequences of non-payment of the NMW?

Failing to pay the NMW can be serious (i.e. schools could be required to pay backdated pay and could face criminal charges if found to have wilfully neglected to pay the NMW). Schools could also be ‘named and shamed’ as part of the NMW Naming Scheme.

Reducing the Risk of Volunteers Acquiring Employment Rights

How can schools reduce the risk of volunteers acquiring employment rights?

Schools need to be pro-active in considering the arrangements they have in place with volunteers, as the line between a genuine volunteer and an individual who is an ‘employee’ or a ‘worker’ can be complex and easily blurred.

There are several steps that schools can take to reduce the risk of volunteers acquiring employment rights. For example:

• Avoid giving a volunteer a contract of employment or engagement (which is a legally binding document). Instead, issue a volunteer agreement which is short, informal in style and nature and sets out the hopes and goals of the relationship rather than any “rights” and “obligations”.
• Avoid making payments to the volunteer or offering “benefits in kind”.
• Allow volunteers to choose their own hours of work.
• Only reimburse a volunteer for reasonably incurred expenses.
• Differentiate between volunteers and paid staff – for example, separate policies and procedures should be implemented for volunteers.
• Avoid disciplining volunteers or threatening them with use of the school’s Disciplinary Procedure. If a volunteer’s attendance or conduct is poor, simply stop using their services.

Case Study

‘Your school has received an unusual request from a newly recruited teacher to, effectively, perform the role as a volunteer and not receive any renumeration for his services. The individual would like the arrangement to remain confidential, such that he is viewed by his peers as a normal member of teaching staff. He would be happy, if the school wishes, for the school to make a donation to its charitable foundation to reflect the salary costs it is saving.

What are the risks associated with engaging the teacher as a ‘volunteer’?’

In summary, engaging the teacher as a volunteer would result in your school taking on a considerable degree of risk from a legal perspective, particularly with regard to employment status and the associated rights and protections, and from a NMW perspective.

• Employment status – given you will have a significant degree of control over the way in which the services are performed by the teacher, he will carry out the services personally and he must work the hours that are required of him, if the teacher’s employment status were to be challenged at an Employment Tribunal, it would be more likely than not that he would be deemed an ‘employee’ for employment law purposes. The implication of a finding of employment status would be that the teacher would be entitled to the statutory rights afforded to employees, in particular holiday pay, sick pay and the NMW, etc.

Even if the teacher were willing to be treated as a ‘volunteer’ rather than a “a normal member of teaching staff” and you could distinguish certain elements of his role in this way, there would still be a degree of risk, at least from a ‘worker’ perspective meaning that he would be entitled to the statutory rights afforded to workers, in particular holiday pay and the NMW.

Based on the factors set out above and the reality of the relationship, for employment law purposes, the teacher is unlikely to be deemed a genuine volunteer and, instead, classed as an employee or ‘worker’ who is entitled to the associated rights and protections.

To a certain extent, the risk of an employment status challenge depends upon the teacher taking steps to challenge the nature of the working relationship. Whilst this may seem unlikely given that the individual has, effectively, asked to be engaged as a volunteer, you should bear in mind that circumstances can change over time. Often such claims will arise in the context of some other dispute. As such, if the teacher were to become disgruntled, there is a risk that he could seek to challenge his employment status in an Employment Tribunal.

• Tax – there is the separate risk that, if HMRC were to audit the arrangements and determine that the teacher is a worker and the school failed to pay the NMW, it may require the school to pay backdated pay and could take other enforcement action. There may also be other potential risks from a tax perspective, which should be explored with the school’s auditors / accountants.

‘How should the school respond to the request?’

To mitigate the risks outlined above, it is advisable to engage the teacher in the usual way (i.e. as an employee under a contract of employment) and pay him accordingly. Should the teacher then wish to donate his earnings to the school’s charitable foundation, he is free to do so. Whilst this will come at a cost to the school and have tax implications for both parties, from the school’s perspective, it is the safest option. That said, we understand that by using Payroll Giving to make charitable donations, there are certain tax advantages. Further details on the Scheme are available here and can be explored with the school’s auditors / accountants. You should also avoid reaching any contractual agreement with the individual in respect of any charitable donations.

If schools have any specific queries in relation to the employment status of volunteers, they should get in touch.