What is employment status?

In UK employment law, there are three categories of employment status:

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• employees - working under a contract of employment with full employment rights

• self-employed - independent contractors

• workers - hybrid status between employment and self-employment

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Whilst these definitions provide a guide to determine status, the key measure is how the arrangements operate in practice.

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Why is employment status important?

Typically, issues regarding employment status occur when there is a dispute between an organisation and an individual working for it.  Often these cases arise as a result of A-typical working (a worker who does not fall into the traditional role of a full-time employee working for a single employer under a contract of employment).   

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Modern working practices, such as zero-hours contracts and supplying labour through digital platforms, have been the subject of recent scrutiny leading to increasing numbers of tribunal cases.

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Employers need to understand the difference between employees, worker, and self-employed to make sure the correct employment rights are applied.

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The correct status will also determine tax implications.  

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How do you determine employment status?​

You're classed as an employee if you:

• have an employment contract from your employer, formed when you accept the job

• tend to be provided regular work by your employer

• are employed to do the work personally

• must do the work

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You could be classed as a worker if your employment is more casual and you usually would:

• have a 'contract for services' (to do work or provide a service for a payment or reward), which can be verbal or written

• be employed to do the work personally

• have very little obligation to receive or do work (for example, a zero-hours contract where you're offered work on an 'as and when' basis) but should do work you've agreed to

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You're usually classed as self-employed if you:

• are responsible for how and when you work

• are the owner of a company or are a freelancer

• invoice for your pay

• get contracts to provide services for clients

• are able to send someone else to do the work for you, if appropriate

• are able to work for different clients and charge different fees

• do not get paid holiday or sick leave

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How do employment rights differ?

Employees have the right to:

• Protection against unfair dismissal.

• A statutory redundancy payment after two years’ service.

• Minimum statutory notice.

• Statutory maternity, paternity, adoption, and shared parental leave and pay, and statutory sick pay.

• TUPE protection (provided TUPE applies to the transfer of undertakings concerned).

• Request flexible working.

• Paid time off for trade union duties and for ante-natal care, and unpaid time off to deal with emergencies for a dependant.

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Both employees and workers are entitled to:

• National Minimum Wage/National Living Wage.

• A written statement of terms on the day the contract starts – workers as well as employees have this right from 6 April 2020.

• An itemised pay slip on or before the day payment is made – from 6 April 2020.

• Working time rights, such as weekly and daily statutory rest breaks, and a 48-hour maximum working week (although they can choose to opt out and work for longer).

• A companion during a disciplinary or grievance hearing.

• Protection from discrimination and from mistreatment following whistleblowing.

• Protection from unlawful deduction from remuneration.

• Health and safety protection.

• Auto enrolment on to a pension scheme.

• Paid annual leave.

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Self-employed contractors have no employment rights, apart from:

• Health and safety protection.

• Protection from discrimination (in some cases) and from mistreatment following whistleblowing.

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Employers Responsibilities 

Employers using a range of contracts should be regularly reviewing working arrangements to ensure both sides know their legal rights and responsibilities.  

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By applying the correct employment status, employers can avoid the possibility of costly and time-consuming tribunals as well as potential financial penalties.  

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​Further Information 

We recommend the following sources of information to keep you up to date:

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Government Guidance: Employment status - GOV.UK (www.gov.uk)

ACAS: Types of employment status: Checking your employment rights - Acas

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If you would like help understanding employment status, get in touch today for a no obligation chat.

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