The reality of a safe contract

The golden age of UK reality television has been clouded by allegations concerning participant treatment (many, let’s face it, believe they’re making a career move rather than acting as a member of the public).

While this may seem far removed from most companies’ concerns, it is relevant to any organisation using consultants, freelancers, contractors or other non-permanent labour.

At the heart of the debate is a familiar business risk: what a contract says may not reflect the relationship’s reality.

A participant, consultant or freelancer may be described as self-employed, but if they’re closely directed, integrated into the organisation and expected to provide services personally, the legal position may be more complicated. That can have consequences for pay, holiday entitlement, working time, dismissal rights and wider regulatory scrutiny.

For businesses under pressure to stay agile, external resource can be attractive. It allows companies to scale quickly, access specialist skills and control fixed costs. But flexibility does not remove the need for governance. Boards and senior leaders should understand who is working in the business, how they’re supervised and whether the practical arrangements match the paperwork.

Employees, workers and self-employed contractors benefit from different levels of protection. The distinction is not determined by title or contract wording alone. Tribunals look at the reality of the relationship, including control, whether the individual is genuinely operating a business and whether they must perform the work personally.

A freelancer may inadvertently become a worker or employee if the company dictates their hours, location, duties, reporting line and delivery method. The risk is heightened where they carry out business-as-usual work, use company systems or are treated like a staff member. Conversely, genuine substitution rights, freedom over delivery and exposure to commercial risk may support self-employed status.

The cost of getting this wrong can be significant. Businesses may face unpaid holiday pay, national minimum wage, pension contributions or other statutory entitlement claims. One challenge can also prompt scrutiny of similar arrangements across the organisation, creating financial and reputational risk. Proposed changes to unfair dismissal rights from 2027 will make classification even more important for longer engagements.

The lesson is straightforward: contractual labels matter, but they aren’t decisive. If the working relationship points towards employee or worker status, the contract may offer limited protection.

These risks often arise unintentionally. A trusted contractor helps during a busy period; a deadline slips; the assignment is extended; the contractor starts attending team meetings and taking on broader responsibilities. What began as a short-term arrangement can gradually become an established role.

Businesses should require approval before engaging freelancers or contractors, and again before extending or materially changing assignments. That should consider the engagement’s purpose, deliverables, duration, reporting arrangements, substitution rights, equipment use, exclusivity and day-to-day control. The process can be simple, but it must be consistent and documented.

Reality TV provided recent headlines, but the underlying issue affects mainstream business. Organisations relying on flexible labour should ensure the commercial need for agility is matched by clear oversight. Regular audits of contractor populations, template contracts reflecting actual practice and manager training on status risks can reduce exposure.

Ultimately, the question for any business isn’t simply what the paperwork says, but how the relationship operates in practice. If those two things drift apart, legal risk can follow quickly.

Dawn Dickson is a Partner with Anderson Strathern​