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Employment status

 
Employment status

18th May 2021

What is employment status?

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

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

  • self-employed - independent contractors

  • workers - hybrid status between employment and self-employment

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

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).   

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.

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

The correct status will also determine tax implications.  

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

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

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

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.

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.

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

  • Health and safety protection.

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

Employers Responsibilities 

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

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

Further Information 

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

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

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

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

 

What our clients say

“Auriol has always been an excellent sounding board and trusted advisor.  Her support and advice not only helped me manage employee issues, but also recruit a strong team”

Stuart McNicoll, Nexus Community Leisure

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