Ultimately, whether you are an employee, a worker or self-employed, you get paid for your work. With the same result involved, does it really matter which status you have? Yes. Unequivocally, yes!
Your employment category has a huge impact on your rights and your expectations of the business you work for. For employers, there is more legislation and associated cost involved with hiring employees and workers compared with self-employed contractors.
In recent years, there have been high-profile cases regarding employment status, notably Uber, Addison Lee and Pimlico Plumbers. All attempted to justify why they worked with self-employed people in their businesses and not employees. Each of their cases were heard at separate Employment Tribunals and generated the same decision … the people involved were classified as employed workers.
Matthew Pinto-Chilcott – MD of Consensus HR states “This is an area that has been a nightmare for business owners for an extremely long time. Many employers believe it is more tax efficient and easier to manage if you make everyone self-employed and just pay their invoices. But is this really the case? Is it really that simple? For too long the employment status of team members has not been fully addressed. The Government, Employment Tribunals & the individuals involved are fighting back.”
What is the difference?
Here’s a handy comparison to help determine whether someone working within your business is officially classed as a worker, employed or self-employed.
An employee is someone who works under an employment contract.
All employees are workers, but an employee has extra employment rights and responsibilities that don’t apply to workers who aren’t employees.
These rights include all the rights workers have (see below) plus:
- statutory sick pay,
- statutory maternity, paternity, adoption and shared parental leave and pay (workers only get pay, not leave),
- minimum notice periods if their employment will be ending, for example if an employer is dismissing them,
- protection against unfair dismissal,
- the right to request flexible working,
- time off for emergencies, and
- Statutory Redundancy Pay.
Some of these rights require a minimum length of continuous employment before an employee qualifies for them. An employment contract may state how long this qualification period is.
A person is generally classed as a ‘worker’ if:
- they have a contractor other arrangement to do work or services personally for a reward (this doesn’t have to be written),
- their reward is for money or a benefit in kind, for example the promise of a contract or future work,
- they only have a limited right to send someone else to do the work (subcontract),
- they must turn up for work even if they don’t want to,
- their employer must have work for them to do for as long as the contract or arrangement lasts, and
- they aren’t doing the work as part of their own limited company in an arrangement where the ‘employer’ is actually a customer or client.
Worker Employment rights
Workers are entitled to certain employment rights, including:
- getting the National Minimum Wage,
- protection against unlawful deductions from wages,
- the statutory minimum level of paid holiday,
- the statutory minimum length of rest breaks,
- to not work more than 48 hours on average per weekor to opt out of this right if they choose,
- protection against unlawful discrimination,
- protection for ‘whistleblowing’(reporting wrongdoing in the workplace), and
- to not be treated less favourably if they work part-time.
They may also be entitled to:
- Statutory Sick Pay
- Statutory Maternity Pay
- Statutory Paternity Pay
- Statutory Adoption Pay
- Shared Parental Pay
A person is self-employed if they run their business for themselves and take responsibility for its success or failure.
Self-employed workers aren’t paid through PAYE, and they don’t have the employment rights and responsibilities of employees.
Someone can be both employed and self-employed at the same time. For example, they may work for an employer during the day and run their own business in the evenings.
Self-Employed Employment Rights
Employment Law doesn’t cover self-employed people in most cases as they do not have an employer.
However, if a person is self-employed:
- they still have protection for their health and safety and, in some cases, protection against discrimination, and
- their rights and responsibilities are set out by the terms of the contract they have with their client.
Are you unsure of the employment status of people working within your business?
Is your business complying with employment law?
Do you find this area of Employment Law confusing?
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