Employee or 
SELF EmployeD

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“Are you an employee, worker or are you self-employed?”

“What rights does a worker have?”


An employee is someone who has entered into works under a

contract of employment.  In most cases it is obvious that a person

who carries out work under a contract is an employee.  For example,

an offer letter will often state that the person is employed to work

for the business and sets out the terms of the employment and what

pay is being offered.


If there is a written Contract of Employment this will usually prove that the person is an employee.  

The problem arises when there is no formal documentation in existence, or when there is a document which denies that the person who provides the work for pay is an employee.


Why does this matter?

It matters because an employee has more rights in law than a worker or contractor.  If the employee has worked in the business for more than a year he has the right not to be unfairly dismissed. If this employment commenced before 6th April 2012. This extends to 2 years if this employment started on or after 6th April 2012.  He also has the right to statutory notice and after 2 years he accrues the rights to a redundancy payment.  Because of agency working and more flexible practices in industry, it is not always clear if a person who provides services is an employee or worker.


Let me give an example shows when this can be confusing:  an agency advertises for staff to pack in a factory.  The factory contracts with the agency to provide them with packers.  The “worker” applies for the role and is interviewed by the agency and offered work at the factory.  The management at the factory show the agency worker what to do and how to do it.  At the end of the week the agency gives the worker pay with a wage slip and makes deductions for tax and National Insurance.  In this case, if it is a short term contract it is likely that the worker will be a worker, and not an employee of the factory, unless the agency takes him on as their direct employee.


“Worker” is defined as “someone who performs personally any work or service for another party to the contract who is not a professional client of his”.  An employee will always be a worker but a worker will not always be an employee.  This is because of a legal concept called “mutuality of obligation”.  Put simply, does A have an obligation to provide work for B?  If so does A have an obligation to do that work?  An agency worker may only get a call telling them there is 3 weeks work as a packer going for so much an hour.  This is an offer of work but A does not have to give B the work and B does not have to accept the work.  If either party can say “no”, then there is no “mutuality of obligation”, so B is not an employee.


For an employee the situation is different.  If there is an agreement for A to provide work to B permanently and for B to do the work, he is employed to do and B receives a salary for it, B is an employee.  If you are a worker because you are a Temp or a casual worker, you do have certain rights, such as the right to accrue and receive holiday pay.  (If you think you should have been paid holiday pay and you have not been, give us a call to discuss as you may be entitled to up to 6 years back-dated holiday pay).


The really complicated cases arise out of whether the worker is in fact self-employed or not.  This occurs frequently in the Construction Industry when the person concerned has a “CIS” card and works for a long period on a particular project.  In these cases the Employment Tribunal has to decide first whether the Claimant is employed, and there are a number of tests to do this.  The “Control test” looks at how much control the Respondent has over the Claimant.  For example, does the Claimant provide his own tools and materials, are his hours fixed, does he get sick pay and paid holidays?  The more control the Respondent has, the more likely that the Claimant is not genuinely self-employed.  They also look at the nature of documents such as contracts, agreements or letters between the parties that set out the scope of the arrangement between them.  Finally, a Tribunal will look at whether there is mutuality of obligation between the parties.


If you think you are not genuinely self-employed and may be a worker or employed we can assist by going through the test with you and giving you our opinion as to what your status is.