Differences between an employee, worker and self-employed - why you need to know

Posted June 2, 2014

Check the lists below to recognise the differences in types of people who work for you.

Employees

Someone who works for you is probably an employee if most of the following are true:

you require them to work regularly unless they are on leave (e.g. holiday, sick or maternity leave)
they are required to do a minimum number of hours and expect to be paid for time worked
a manager or supervisor is responsible for their workload, saying when a piece of work should be finished and how it should be done
they cannot send someone else to do their work
you deduct tax and National Insurance contributions from their wages
they get paid holiday
they are entitled to contractual or statutory sick, maternity or paternity pay
they can join your pension scheme
your disciplinary and grievance procedures apply to them
they work at your premises or at an address specified by you
their contract sets out redundancy procedures
you provide the materials, tools and equipment for their work
they only work for you or if they do have another job, it’s completely different from their work for you
their contract, statement of terms and conditions or offer letter uses terms like ‘employer’ and ‘employee’

If someone does casual or irregular work for you and most of the statements below apply to them, it is likely they are a worker:

they occasionally do work for you
you do not have to offer them work and they do not have to accept it – they only work when they want to
their contract with you uses terms like ‘casual’, ‘freelance’, ‘zero hours’, ‘as required’ or something similar
they had to agree with your terms and conditions to get work (either verbally or in writing)
they are under the supervision or control of a manager or director
they cannot send someone else to do their work
you deduct tax and National Insurance contributions from their wages
you provide materials, tools or equipment they need to do the work

If most of the statements below apply to someone, it’s likely that they are self-employed because they:

put in bids or give quotes to get work
have specific pieces of work or projects to do but decide how to do the work
are not under direct supervision when working
can hire someone else to do the work
submit invoices for the work they have done
are responsible for paying their own NICs and tax
do not get holiday or sick pay when they are not working
are required to do unsatisfactory work again in their own time and at their own expense
are responsible for losses and taking profits from their work
can provide services to a number of different clients or customers
operate under a contract that uses terms like ‘self-employed’, ‘consultant’, or an ‘independent contractor’

Employees, workers and the self-employed have different rights under employment legislation.

Self-employed people should have their terms and conditions of work outlined in a written agreement with you.

Workers and employees have very different employment rights. Workers have a limited number of rights under employment law which include:

An employee has much more employment protection under legislation which include all the above plus:

If you would like to know more then please do contact me.

Image credit:

By JMRW67 (Own work) via Wikimedia Commons