Employed, self employed or worker?
Your rights at work depend on your employment status. There are three broad categories:
- Employee (contract of service).
- Worker (contract for service).
- Self employed.
Contract workers, temps, casuals, and persons working on zero hours contracts may be either employees or workers. Agency workers may be employees or workers of either the agency or (unusually) the company where they are placed.
Employee shareholders are individuals who agree to give up certain employment rights in return for being given shares in the employing company; strict rules apply on how this arrangement may be entered into.
All employees are also workers, but not all workers are necessarily employees.
It is important to work out your employment status so you know what rights you have. You may have more than one status – for example, you may be a “worker” in respect of some work you do for a business and “self-employed” in respect of other freelance work you carry out.
Do be aware that your status for tax purposes (reporting to HMRC) is not necessarily the same as for employment law purposes.
For many people it is obvious whether they are an employee, self employed or a worker. However there are grey areas, and the label you are given may not be accurate. Some employers try and label people as self employed or casual to avoid giving people certain rights.
You do not have to have a written contract to determine your employment status*, although if you have one, this is the document you should look at first to help work it out. If you don’t have a written contract, think about what has been agreed. A contract can be oral and it can be implied based on what actually happens in practice. A contract can be short term and in some cases, it can be intermittent.
Even if you do have a written contract, if what happens in practice is different than what the written document says, a Tribunal may conclude the real contract is what happens in practice, not what is in the written contract. For example, even if on paper you are described as being a zero hours worker, if in practice your employer treats you as an employee in terms of your freedom to refuse work or more generally your obligations once you have been offered work, a Tribunal may conclude you are actually an employee.
*Note that employers are required under section 1 of the Employment Rights Act 1996 to give employees a written statement of their terms and conditions within 2 months of their employment starting.
There is no single conclusive test to determine someone’s employment status, so an Employment Tribunal will look at the facts and consider a number of tests including:
- Does the employer have an obligation to give you work, or pay you even if there is no work? Do you have to do the work you are given? If yes, this suggests you are an employee.
- Do you personally have to turn up to do the work, or can you send someone else to do it? If you have to do it yourself or find cover from amongst your colleagues, you are more likely to be an employee.
- Does your employer control when, where and how you do the work, or do you? For example, do you have to book annual leave with your employer? If the employer has a great degree of control over your work, this suggests you are an employee.
- Are there other factors present which suggest it is a contract of employment? For example, do you pay tax and NICs through PAYE? Does your employer provide the equipment necessary to do the work? Do your employer’s disciplinary procedures apply to you?
If the answer to the questions above is “yes” then this would provide further evidence pointing to the fact that you are an employee.
If you are not an employee, in considering whether you are a “worker” or “self-employed” an Employment Tribunal would again look at a number of factors including whether:
- you are working under a contract (not necessarily a contract of employment)
- you agree under that contract to personally provide work for the “employer” and
- the business or person you are providing services to personally is a customer or client of your business or profession.
If you work for a business that is actually supplying you to provide services to an end-user, and is maintaining certain levels of control over how those services are being provided, a tribunal may be more likely to conclude that you are a “worker” of that business, rather than self-employed.
Employees have the best protection. For example, rights which only apply to employees include the right to claim unfair dismissal, statutory notice periods, redundancy pay, rights to maternity, paternity and parental leave and the right to request flexible working.
Workers have fewer rights, for example, they cannot claim unfair dismissal, and they are not entitled to maternity leave or to paternity leave, although they may be entitled to maternity pay and paternity pay. But workers do have certain rights over and above self employed contractors, including rights to the national minimum wage, whistleblowing protection, the right to holiday pay and rest breaks (under the Working Time Regulations), and they are protected by discrimination legislation. They have the right to be automatically enrolled in a pension scheme if they satisfy certain minimum age and earnings thresholds. If you are a worker, you also have the right to be accompanied to a disciplinary or grievance hearing by a fellow worker or trade union representative.
Self employed people have the least protection, but may prefer being self employed as it fits in with their lifestyle or the kind of work they do. Discrimination legislation does apply to the self employed.
If there is a dispute about your employment status, it will either be to do with your tax and National Insurance affairs, or a statutory payment such as Statutory Sick Pay, in which case HMRC decide; or because you are making a complaint to an Employment Tribunal, in which case the Tribunal would decide.
If your employment status is not clear, or you are in disagreement with your employer about it, you can find more information on GOV.UK , call our helpline or seek legal advice from for example, a Citizens Advice Bureau or, if you are in a trade union, from your union official.