Are you an Employee, Worker or Self-employed?

Under current law, these are the three categories of individuals providing their services to the job market.

Why does it matter?

Your employment status is important for a number of reasons, such as:

  • How you are treated by HM Revenue and Customs for tax purposes;
  • Whether you qualify for important legal rights, as some only apply if you are an employee (the right not to be unfairly dismissed);
  • If you are an employee, to be aware that you have obligations implied into your contract of employment, such as a mutual duty of trust and confidence; and,
  • Whether you need to obtain insurance as a self-employed contractor or whether your employer is obliged to do so.

1. Employees

An employee is defined in statute as someone who works under an employment contract (which can be express or implied, oral or in writing). All employees are workers, but not all workers are employees.

An employee has extra employment rights and responsibilities that do not apply to workers who are not employees. For example employees:

  • Are covered by the Acas Code of Practice on Disciplinary and Grievance Procedures, a best practice code that employers must follow to avoid paying an uplift in a tribunal claims;
  • Are automatically transferred to any buyer of their employer’s business under TUPE (the Transfer of Undertakings (Protection of Employment) Regulations 2006); and,
  • Must be protected by employer’s liability insurance and statutory duties on their employer regarding health and safety.

In respect of statutory rights that workers do not have, employees:

  • Are entitled to minimum notice periods if their employment will be ending;
  • Are protected against unfair dismissal;
  • Have the right to request flexible working and time off for emergencies; and,
  • Are entitled to Statutory Redundancy Pay.

2. Workers

A worker is someone who has a contract or other arrangement to do work or services personally for a reward (usually money, but it can be a benefit in kind).

Workers can have a limited right to send someone else to do their work (subcontract) and, like employees, they must attend for work and be provided with work during the contract (‘mutuality of obligations’).

Workers have the statutory right to:

  • Be paid the National Minimum Wage and receive the statutory minimum level of paid holiday and rest breaks;
  • Be protected for raising any wrongdoing at work (whistleblowing);
  • Not have unlawful deductions from wages or work more than 48 hours on average per week, unless they have agreed to opt out;
  • Not face unlawful discrimination; and,
  • Not be treated less favourably because they work part-time.

3. Self-employed

Self-employed independent contractors work under a ‘contract for services’ and run their own business. This means they can:

  • Subcontract their work;
  • Decide when and whether to work;
  • Undertake the work in the manner they see fit;
  • Pay their own tax and National Insurance; and,
  • Make their own sickness and holiday arrangements.

Recently, there has been much media focus on the emergence of the ‘gig economy’, where individuals are engaged by businesses on a flexible, ad hoc basis. Tribunals must take into account the reality of the relationship, going beyond the written contract to examine what happens in practice. In Leyland and others v Hermes Parcelnet Ltd (2017), Hermes couriers were held to be workers, despite being classed as self-employed, because the Tribunal considered there to be a dependent work relationship, with the couriers having little autonomy, even with the right to provide a substitute. Working out who is an employee/worker and who is self-employed can be unclear. If you need advice on any aspect of your work, get in touch with us today on 0203 146 3549 / e:mail: info@lflegal.co.uk.

Disclaimer

All our articles are intended for informational purposes only and do not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information provided.

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