January 5, 2024
Understanding your employment status is more than just a bureaucratic necessity; it defines your legal rights and obligations in the workplace. There are three primary categories: Employee, Worker, and Self-employed.
Let's delve into each to demystify the complexities surrounding employment status.
The Employment Rights Act 1996 defines an employee as someone who:
While all employees are workers, not all workers are employees. Being a worker entails:
If you're self-employed:
When determining if someone is self-employed, the level of control, integration into the employer's business, active marketing, short-term engagements, providing specialist services, invoicing, supplying your equipment, and taking on risks are also taken into account.
Employment status tests depend on case-specific facts. Legal tests have evolved through case law which can help us determine the appropriate status, with personal performance and the right of substitution gaining prominence.
An individual is likely an employee if:
An individual is likely a worker if:
An individual is likely self-employed if:
There are different tests for self-employment depending on whether you’re considering your employment status for tax or employment law purposes.
Factors taken into consideration when determining whether an individual is self-employed for tax purposes include: autonomy, ability to make a profit or loss, hiring others, fixing unsatisfactory work, agreeing on a fixed price, using personal funds for business, working for multiple clients, and being in business for oneself.
If you’re unsure about your status, it’s always advisable to get legal advice, especially because the tax implications of getting it wrong can be significant.
Our team of employment lawyers are here to help.