What is my employment status? Employee, worker or self-employed?

Your rights at work depend on your employment status.

There are three broad categories:

• Employee
• Worker
• Self-employed (sometimes referred to as “independent contractor”)

Contract workers, gig economy staff, temps, casuals, and persons working on zero hours contracts are likely to be either employees or workers. 

Agency workers may be employees or workers, of either the agency or the company where they are placed (the “hirer”).

There is one further category, which is relatively rare – 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.

Why is this important?

Your employment status is important because it determines which rights and obligations you have in law.

Employees have the strongest protection e.g. only employees can claim Unfair Dismissal or may be eligible for statutory family leave and pay.

Worker status was created to recognise that some people who are not employees still need protection, particularly where they are not fully independent. Workers have some legal rights such as protection from discrimination, the right to the National Minimum Wage and to annual leave.

Self-employed people (who are not workers or employees) enjoy none of these rights. For a table setting out which rights apply to each category, see below.

Working out your employment status is complicated as there is not a single test. If you are an employee you are likely to have a contract of employment. However, the documentation you have in relation to your role may not be accurate; you could have been labelled a worker when you are in fact and in law an employee.

There are costs implications for businesses which are found to be engaging “employees” or “workers” rather than what they have described as “self-employed” or ”independent contractor” staff – see further below on the Uber case in the Supreme Court. This is particularly the case in the “gig economy”.

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 work you carry out, e.g. if you do some work on a freelance basis, and you have another, quite separate workstream.

Your status for tax purposes (reporting to HMRC) is not necessarily the same as your status for employment law purposes.

Please note that Working Families does not give any advice on tax. This page is guidance about employment law issues only.

What is my employment status?

For many, it is obvious whether they are an employee, self-employed or a worker.

However, there are grey areas, and in reality, there is no easy answer. If it can’t be determined and agreed, it will be for an employment tribunal to decide your employment status.

The best place to start is to look at how you work in practice – rather than at what your documentation says. ACAS has a really helpful list of questions to consider for each category to help decide whether you are an employee, a worker or self employed.

It is important to note that the label and the contract you are given by your employer may not be accurate – in fact it could be intentionally misleading. Some businesses, particularly in the gig economy tell staff that they are workers or self-employed in order to seek to avoid giving people additional rights.

Difficulty often arises in identifying the boundaries of the three categories, which often appear blurred.  It may be clear that someone who is an employee will not be self-employed, but the dividing line between an employee and the intermediate category of worker, or a worker and a self-employed person who is in business on their own account, will sometimes be harder to work out.

So – each individual’s status will depend on how their working arrangement operates in practice.

Here are some tips on working out your status:

Check your contract against the reality of your day to day working arrangement

You do not have to have a written contract to determine your employment status, although if you have one, this will be helpful as it may confirm that you are an employee. If you don’t have a written contract, you may have a right to request one.

You should also think about what has been agreed. A contract can be oral/verbal, 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 from what the written document says, an Employment Tribunal will look at the facts – 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 workplace 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 that you are actually an employee.

Factors to consider – employee vs worker

There is no black and white way to determine someone’s employment status. If your status is not clear, an Employment Tribunal will look at the facts and consider the following:

(a) Does the employer have an obligation to give you work, or pay you even if there is no work? And, do you have to do the work you are given? If yes, this suggests you may be an employee. (This is sometimes called the “mutuality of obligation” test)

(b) 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 you are more likely to be an employee.  If you can generally ask someone else (“substitute”)  to do it for you and in practice this occurs, then you are more likely to be a worker or self-employed. (This is sometimes called the “substitution” test or the “personal service” test).

(c) Does your workplace have a lot of control over you, for example relating to when, where and how you do the work, or is this mainly controlled by you? For example, do you have to book annual leave? Does someone else at your workplace make the decisions about the way in which your work is performed, and around the technology you decide to use, around the time and place you work and when you work? Does someone else direct the way that your work should be carried out, or actively manage you in the performance of your duties? Are you required to comply with internal procedures which apply to others who are employees? Are you treated as being part of the business/staff team on a day-to-day basis? Each of these factors may indicate control or, if it doesn’t exist, a lack of control over you in your work

So – if the company you are working for has a great degree of control over your work and how you perform it, this suggests you may be an employee.

(d)  Are there other factors present which suggest that you are working under a contract of employment? For example, do you pay tax and NICs through PAYE? Does your workplace provide the equipment necessary to do the work, at their cost? Do your workplace’s disciplinary procedures apply to you?  Are you permitted to work for other employers?

If the answers to the questions above are mainly  “yes” then this may be indicative that you are an employee, rather than a worker or self-employed. 

The ACAS website also has a number of questions to help you work out your status.

Factors to consider – worker vs self-employed

If you are not an employee, in considering whether you are a “worker” or “self-employed” an Employment Tribunal would again look at how the arrangement operates in practice.

A self-employed individual would usually have a greater degree of freedom in their methods of working.  For example, although not determinative, the Employment Tribunal would consider factors such as whether:

(a) the services you perform are ancillary to the main business of the employer (e.g. you might run your own bookkeeping practice and help businesses with their accountancy needs from time to time or you might be a website designer and update a company’s webpage as necessary);

(b) you run your business for yourself and are responsible for its success or failure;

(c) you work more independently from the employer are less likely to be submitted to the same controls or supervision that would be exercised over an employee;

(d) you provide your own equipment and be responsible for maintaining it;

(e) you determine your own working days and hours; and

(f) you have the ability to send a substitute to perform the work in your place.

If you work for a business that is 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.

Real life example – Uber drivers and the Supreme Court

Following the Uber judgment by the Supreme Court, when deciding if a person is a worker, Employment Tribunals should look at the wording and purpose of employment legislation first, before looking at the terms in an individual’s written contract. This is because most employment legislation seeks to protect individuals who are vulnerable to unfair treatment, when deciding the terms and conditions of their services and pay.

Businesses cannot “contract out” of (i.e. try to use clever wording to avoid) statutory rights which are the legal protections which Parliament intended to give in legislation. So, just because you may be described as a ‘partner’, ‘contractor’ or ‘consultant’ does not mean that you are not a worker.

Tribunals should therefore focus on the reality of the situation if the written contract doesn’t reflect the day to day reality of the relationship. This recognises that generally the stronger employment rights that individuals seek to rely on are statutory employment rights (from laws brought by parliament) rather than contractual rights.

In this case, the Supreme Court ruled that an Employment Tribunal had been correct to find that Uber drivers were “workers”, as opposed to being “self-employed” (or “independent contractors”).

The reasons for this decision were those set out above – (regarding policy, and the purpose of employment legislation) – plus a detailed examination of the evidence in the case about the practical day-to-day working reality of Uber drivers. This included the degree of control exercised over the terms of the Uber drivers  services, for example in setting fees and how much the drivers were paid, in setting a route for each journey which drivers may be penalised for not following, drivers having to sign up to a standard agreement, drivers having very little choice about which jobs they accept and how to use the Uber app, and drivers having very restricted contact with the passenger, including in relation to complaints).

The decision in the case has meant that the Uber drivers had significantly enhanced rights, including: the right to sick pay and to be automatically enrolled in a pension scheme in certain circumstances; the right to receive the National Minimum Wage; the right to the statutory minimum holiday pay; and to take rest breaks and other protections under the Working Time Regulations.

The Uber case was decided at the highest court in the UK, and therefore is likely to set a strong precedent for how Employment Tribunals will decide future cases regarding employment status.

So, the answer as to whether you are a worker or self-employed (an “independent contractor”) will still depend on weighing up a number of different factors. But – it is now clear that if a high degree of control is exercised by the business over the individuals who work for it, this will be a strong factor in the legal argument that those individuals may be regarded as workers, with significantly more legal rights (and costs to the business).

What are my rights?

If you are concerned that your employer is underpaying you or not treating you fairly because you are a worker rather than an employee, our factsheet below may provide some answers. You can download this and show it to your employer.

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. Employees of a business also have the right to protection under the Transfer of Undertakings regulations (TUPE) when the business they are employed by changes ownership.

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, under the Equality Act 2010.  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 (or “independent contractors”) 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 sometimes apply to the self-employed.

Also take a look at our pages of general advice about Unfair Dismissal and Discrimination.

Here is a table setting out the key rights, and who they apply to:

What if there is a dispute?

If there is a dispute about your employment status, it will probably be to do with one of the following issues:

• your tax and National Insurance affairs;
• a statutory payment such as Statutory Sick Pay, in which case HMRC will decide; or
• because you need to understand your status for the purpose of your employment rights.

You can make a complaint to an Employment Tribunal about a breach of your employment rights and protections. If your employment status is unclear, the Tribunal will consider the nature of your role in practice, before deciding your employment status, and then looking at what claims you are eligible to bring (e.g. Unfair Dismissal) and whether there has been a breach of your rights.

Please see our advice pages for further advice on how the Employment Tribunal system works, and the time limits on bringing a claim to the Tribunal.

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.

This advice applies in England, Wales and Scotland. If you live in another part of the UK, the law may differ. If you are in Northern Ireland you can visit the Labour Relations Agency or call their helpline Workplace Information Service on 03300 555 300.

Our helpline and online contact form is now closed as we wind down our operations. Our free legal advice pages remain available and up to date until further notice. You can find a list of trusted organisations that may be able to help you below.