Differentiating between an employee, a worker and a self-employed

Know the difference between an employee, a worker and a self-employed, and what are the consequences in UK contract law.
General overview of a sales agreement in Switzerland

Employment Status in the UK: Employee or Self-Employed  

Employment status outlines the nature of the business relationship, classifying people according to the terms and conditions of their employment. These statuses slightly differ in obligations, taxes, social security, etc. Subsequently, business documents used for cooperation between two parties are also unlike. 

  • Employee – the person who works for an employer under an employment contract and receives regular payment for his or her work. 
  • Self-employed – the person who runs his or her business and receives money for the provided services.  

As you see, there is no straightforward definition of what it means to be employed or self-employed. So, a case-by-case assessment is necessary. 

The person is likely to be an employee if he or she: 

  • is told what work to do, as well as how, where, and when to do it 
  • has to do the work himself or herself 
  • can be moved from task to task 
  • is contracted to work a set number of hours and gets a regular wage or salary, even if there is no work available 
  • has an employment contract and works for a business which is not his or her own 
  • gets time off for things like sickness and holidays, which is usually paid subject to the terms of employment or according to statutory rules. 

Things differ once the person is self-employed, while he or she: 

  • agrees to do the work, but can also send someone else to do the job for him or her. For instance, a builder who can send another person with similar skills in their place 
  • probably has several customers at the same time 
  • can do the work how, where, and when he or she likes. For example, a writer who agrees to write a book and can write whenever he or she wants to, as long as he or she meets the deadline set by the contract 
  • runs a business and takes responsibility for its success or failure, such as a joiner who has to redo unsatisfactory work and cannot charge the customer for the time spent redoing the work 
  • supplies himself or herself with the main items of equipment or tools needed for work. This may include a pick-up truck or scaffolding. 

Please note: these criteria are not cumulative, and each criterion may carry more weight than the others, depending on the individual situation. 

Employment Rights of Employees and Self-Employed in the UK 

Employees are protected by labor laws and have the following rights: 

  • to receive the National Minimum Wage 
  • to have a statutory minimum for paid holidays 
  • to adhere to a weekly average work limit of 48 hours or to opt out of this right if they choose 
  • to be fairly treated 
  • to get a statutory sick and parental pay 
  • to be informed about the dismissal according to the rules of a fair termination 
  • to take time off in case of emergencies 
  • to receive a redundancy pay. 

Since self-employed people are their employers, they fall outside the scope of employment law. Still, however, they have: 

  • health and safety protection 
  • fair treatment right 
  • some other rights and duties outlined in the contract established with their client. 

AdminTech Recommends

During the hiring process, regulations also slightly differ. So, if you decide that a particular person will work for you as a self-employed individual, it’s advisable to: 

  • Request the proof of tax status of the self-employed. You can use the online government tool for this.  
  • Include a clause in the freelance contract requiring the freelancer to inform you regularly if his or her status changes. 
  • Include a provision in the freelance agreement that transfers any applicable social security charges or taxes to the freelancer’s compensation. This ensures that you have recourse against the freelancer if authorities determine employee status. 
  • Keep all records of assessing the service provider’s status.
Create your freelancer agreement in a couple of clicks

In the situation of hiring a person as an employee, one of the main points is to establish a valid employment contract that will help to ensure clarity, compliance, and a positive working relationship between both parties.  

You can take advantage of our legal employment contract templates and adapt them to the type of work and the employee. Just navigate the rules of employment law with our information boxes, which provide guidance and make your work fast and secure. 

Create your standard employment agreement in a couple of clicks

AdminTech team is always ready to help you with legal agreements and ensure their legal compliance.