Employment Status: Am I a Worker or an Employee?

Caragh Bailey
26/10/2020
employment status advice from employment law friend

Your employment status defines what rights and protections you are entitled to at work, as well as your employer’s responsibilities towards you.

It's not always clear what employment status your work is classed as, and sometimes your contract may describe you as one employment status, when you actually deserve the legal rights of another.

As well as understanding your rights, your employment status affects your tax obligations. You and your employer may have to pay unpaid tax and penalties if your employment status is wrong. You may also lose your entitlement to benefits.

The three main types of employment status are:
Worker
Employee
Self employed (or contractor)

You might also be:
A director
An office holder

Your contract of employment should tell you your employment status. If you don't know your employment status, or, you think your employment status is wrong, read ahead to work out which employment status best describes you.

Employment status: Worker

You are probably a worker if most of these are true:
  • You have an arrangement to do work or services yourself, for a reward. This might be a written or verbal contract of employment.
  • The reward is usually money, or a benefit in kind.
  • You have a limited right to send someone else to do their work (often called subcontracting).
  • You have to go to work, even if you don’t want to.
  • The work you’re doing is not on behalf of your own Limited Company, where the ‘employer’ is your client or customer.

Check your employment rights here.


You are probably a casual or irregular worker, if most of the following statements are true:
  • You do work for a specific business on an occasional basis.
  • The business offers you work when they have it, but they don’t have to.
  • You can take the work if you want it, but you don’t have to.
  • Your contract or work description uses terms like ‘casual’, ‘zero hours’, ‘freelance’, ‘as required’.
  • You have agreed to the businesses terms and conditions, in order to take the work.
  • You have a manager or director who supervises your work.
  • You cannot send someone else to do your work.
  • The business deduct your tax and NI (national insurance contributions) from your wages.
  • The business provides the tools or equipment you use to do your work.

Click here to read about your rights in a casual or zero hours contract.

Employment status: Employee

An employee is a worker with extra rights and responsibilities. You are probably an employee if most of the following statements are true:
  • You are required to work regularly unless you are on leave (such as holiday leave, sick leave).
  • You have an agreement to do a certain number of hours as minimum, and to be paid for them.
  • You have a manager or supervisor who tells you what to do, and how to do it.
  • You can’t send someone else to work in your place.
  • Your employer deducts your tax and NI from your wages.
  • You get paid holiday.
  • You are entitled to sick pay, maternity and paternity pay.
  • You are entitled to join the business’ pension scheme.
  • The business’ disciplinary and grievance procedures apply to you.
  • You work at the business’ premises, or at an address specified by the business’, (unless you have a remote working arrangement).
  • Your contract tells you the business’ procedure for redundancy.
  • The business supplies any tools, materials or equipment for you to do your work.
  • You only work for this business, or if you do have another job, it’s not connected to the business.
  • Your contract of employment uses terms like ‘employee’ and ‘employer’.


Employment status: Employee Shareholder

You are an employee shareholder if you are an employee who owns shares in your employer’s company (or parent company) worth at least £2000.


Employment status: Self Employed and Contractors

You are probably Self Employed if most of the following statements are true:
  • You run your business for yourself.
  • You are responsible for the success or failure of your business.
  • You put in bids or give quotes for your work.
  • You are not under direct supervision when you’re working.
  • You submit invoices for the work you have done.
  • You aren’t paid through PAYE (Your tax and NI contributions are not deducted from your pay).
  • You are responsible for paying your own tax and NI.
  • You don’t get holiday pay or sick pay.
  • Your contract uses terms like ‘self employed’, ‘consultant’, or ‘independent contractor’.

You may be classed as self employed for tax purposes even if you have a different employment status under employment law.

Your employment status is self employed for tax purposes if most of these are true:
  • You run your business for yourself.
  • You are responsible for the success or failure of your business.
  • You decide what work you do and when, where or how you do it.
  • You can hire someone else to do the work.
  • You are responsible for fixing any unsatisfactory work you do in your own time.
  • Your client or employer agrees a fixed fee for the work, regardless of how long it takes you to complete it.
  • You spend your own money on assets, tools, materials and equipment for your work.
  • You’re responsible for any running costs of the business.
  • You can work for more than one client.

If you’re self employed and get work through an agency, you might be a contractor. If you are a contractor, you may be entitled to the same rights as a worker for the duration of your contract. If you’re working as an employee through the agency, you should get the employment rights of an employee. Check your contract or ask your agency to find out. Click here for agency workers' rights.


Employment status: Director

You are a director if you run a limited company on behalf of shareholders.
As a director you are responsible for:
  • Following the company’s rules as shown in it’s articles of association.
  • Keeping company records and reporting changes to Companies House.
  • Filing your accounts and your Company Tax Return.
  • Telling other shareholders if you might personally benefit from a transaction the company makes.
  • Paying Corporation Tax.

If you do other work that isn’t related to your directorship, you may have an employment contract for that work, and have employment rights.

You are classed as an office holder for tax and NI purposes.

Read more about running a limited company at GOV.UK

Employment status: Office Holder

You are an office holder if you have been appointed to a position by a company or organisation but:
  • You do not have a contract of employment.
  • You do not receive a salary or any other form of regular payment.
  • Your only payment is voluntary (honorarium) regardless of the work you do. (Tax and NI are deducted by the appointing body).
  • Your duties are minimal.
  • Your duties are only what is required under the relevant statute, constitution or trust deed.
  • Effectively, you are an independent office, not under the close supervision or control of the appointing body.

  • For example:
      Statutory appointments:
    • Registered company directors or secretaries.
    • Board members of statutory bodies.
    • Crown appointments.
    • Appointments under the internal constitution of an organisation:
    • Club treasurers.
    • Trade union secretaries.
    • Appointments under a trust deed:
    • Trustees.
    • Ecclesiastical appointment:
    • Clergy members.

    • If you have an employment contract with the same company, which matches the criteria for employees above, you may also be entitled to employment rights as an employee.

      Got a problem with your employment status?
      You can get in contact with us and see how we can help.

      Employment Law Specialist | Competitive Quotes | Straight Talking Legal Support


      This content is provided free of charge for information purposes only. It does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of our company. For employment law advice please get in contact and speak to your employment law solicitors.
 
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