What’s the difference between an employee, a worker and a self-employed person?

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The last few years have seen big changes in employment law and how we work. Self-employment is on the rise, and flexible and hybrid working is becoming the norm for employees, but what legal rights do workers have?

As an employer, it’s important to be aware of the different types of employment status and that your employment contracts and service agreements are suitable for each. Having the right contracts in place not only ensures that employers and their workforce are on the same page, but it helps to avoid any potential disputes further down the line.

In this blog, our employment law solicitors look at what the difference is between employees, workers and self-employed staff, and how their legal rights differ.

What are the different types of employment status?

There are three main types of employment status under the Employment Rights Act 1996:

Employee

An employee is someone who works for an employer or business owner under the terms of an employment contract.

Employees can expect a consistent flow of work which they have an obligation to carry out unless they are on leave, for example, holiday or maternity leave.

Employers are responsible for paying and taxing their employees as well as offering additional rights such as maternity and paternity pay, a minimum notice period and Statutory Sick Pay. They are also subject to their employer’s disciplinary and grievance procedures.

Employees are workers but the key difference is that they have extra employment rights that do not apply to workers who are not employees.

Worker

Workers are individuals who work personally under any type of work contract and are not self-employed. Common examples include agency workers and freelancers.

A worker’s job is often more casual and they have less obligation to make themselves available to work. Workers do have basic employment rights such as written terms of their role and responsibilities, health and safety protection, National Minimum Wage and paid holiday.

It is important to note that many workers often carry out full-time work on a permanent contract but, as they are not classified as employees, employers are not legally obliged to offer particular rights and competitive pay. This is something to take into consideration when thinking about recruitment and drafting employment contracts.

Self-employed

Self-employed workers are free to decide when, where, for whom and how they work. They can make their own sickness and holiday arrangements, and have to pay their own taxes and National Insurance.

Self-employed workers have fewer employment rights than employees and workers but can receive protection for their health and safety on their client’s premises, as well as being protected against discrimination.

As an employer, to establish whether someone is self-employed, rather than a worker, you must check:

  • Tax law: if they are self-employed, they may be exempt from your PAYE scheme
  • Employment law: a self-employed worker may have employee or worker rights

How do I work out the employment status of an employee?

Employment law can be a minefield to navigate, and one of the most common areas that employers struggle with is working out whether someone is an employee, a worker or self-employed.

A good place to start is GOV.UK or Acas, however, if it’s not clear cut and/or you want to get professional advice, our employment law solicitors are here to help. We can help ensure that your contracts and agreements reflect your workforce’s employment status and help you avoid any potential pitfalls.

It is important that the employment contract or agreement reflects the reality of the work situation. Our employment lawyers can do this by getting to know your company, your business and your staff.

If you are involved in a dispute with an employee or worker and it reaches an employment tribunal, the court can make a decision about their employment status, as seen in Uber BV v Aslam and Others. However, this can be avoided by having legally sound contracts in place from the start.

Why is it important to understand your employees’ rights?

In a post-pandemic world, employees are more conscious of their rights. It is therefore more important than ever for employers and business owners to make sure any contracts or agreements are correct and up-to-date, and seeking specialist legal advice cannot be understated.

Taking the time to make sure your employment practices are up to scratch can help you avoid unwelcome issues in the future and ensure your workplace is built on trust and respect. Our specialist employment lawyers can provide you with straightforward, common-sense advice to help you achieve this.

Get in touch with our employment solicitors in Bristol

Our specialist employment lawyers work with businesses and employees all over the UK from our six offices in Bristol and the surrounding area.

To speak to our solicitors about employment contracts, service agreements, or any other employment matter, call us on 0117 325 2929 or complete our online enquiry form.

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