Uneak White's Personal Brand Exploration Presentation
Employment status key points
1. Employee, Worker or Self-employed?
How to tell the difference and what the implications are.
What types of employment are there?
1. Permanent employee 5. Contractor
2. Temp 6. Agency worker
3. Self-employed 7. Casual
4. Freelancer 8. Zero hour
In fact there are only three types of legal employment status, employee, worker and self-
employed.
Who decides?
HMRC or Employment Tribunal. Not the employer and not the worker. If HMRC finds
employed rather than self-employed, ET unlikely to find differently, and vice versa, although
decisions are not binding on each other.
How do they decide?
They will look at number of factors and case law, based on how the relationship between
the two parties works. Substance rather than form.
Substitution
Control
Regular pay
Tax & NI responsibility
Holiday pay, sick pay, maternity pay etc
Location and tools and/or facilities
Integration into business
Financial risk or reward
Exclusivity
Contract
Why does it matter?
££££ in fines from HMRC and/or compensation following an ET.
While all is good, only real risk is HMRC. If worker becomes unhappy about something, gets
pregnant or you want to dispense with their services, they may claim employment rights.
3. Personal Service Consultants
(Also might be called freelancers or contractors)
1. Regularly work for a single company or business
2. Have a contract which describes them as a 'consultant' or similar
3. Provide specialist advice or assistance in connection with the
operations of the business or specific projects
4. Have contracted to provide services for a minimum number of
hours/days each month/year
5. Report to the company's managers/directors, but are not under any
direct supervision or control when working
6. Are expected to perform the work themselves
7. Submit invoices for work completed and are responsible for paying
own tax and National Insurance
8. Provide own equipment
9. Work from home or a private office, but go to the company's
premises when necessary
Not employees because are they not directly controlled by the business or integrated
in the business
= WORKER
4. Independent consultants
(Also might be called contractor or freelancer)
1. Bid or provide quotes to secure work
2. Have specific targets or projects to complete, although can decide
when and how to do the work
3. Are not under direct supervision when they are working
4. Do not have to perform the work personally - they can hire someone
else to do the work or engage helpers at their own expense
5. Submit invoices for work completed
6. Are responsible for paying own tax and National Insurance
7. Do not receive any holiday pay or sick pay when unavailable for work
8. Provide major items of tools, equipment or materials that are a
fundamental requirement to complete a job
9. Have to correct unsatisfactory work in your own time and at your
own expense
10. Are responsible for meeting any losses, as well as taking the profits
from work
11. Provide your services, or could provide services, to a number of
different clients or customers
12. Operate under a contract (maybe called a 'contract for services' or a
'consultancy agreement') which describes them as 'self-employed', a
'consultant' or an 'independent contractor'
=SELF-EMPLOYED
5. Employees
1. Are required to attend work on a regular basis unless they are on
authorised leave (eg holiday, sickness absence, maternity leave)
2. Are required to work a minimum amount of hours (whether fixed or
variable) and expect to get paid for the hours they work
3. Have a manager or supervisor who is responsible for their workload,
directing when particular work should be completed and the way it
should be undertaken
4. Cannot send a substitute to do their job
5. Work at the company's premises or at a location specified by the
company
6. Use tools and equipment provided by the company
7. Are included in the company's organisational chart
8. Work exclusively for the company or have another job, but it is
entirely different from their work for the company
9. Have tax and National Insurance deducted from wages
10. Have received (or would be entitled to) contractual or Statutory Sick
Pay from the company when unable to work through illness or injury
11. Have received (or would be entitled to) contractual or Statutory
Maternity or Paternity Pay from the company when on maternity or
paternity leave
12. Receive payment from the company when taking holiday
13. Can join the company pension scheme
14. Are subject to the company's disciplinary and grievance procedures
15. Have a contract, statement of terms and conditions, or an offer letter
which uses terms such as 'employer' and 'employee' and/or is
described as an 'employment contract'
= EMPLOYEE
Note – If (1) – (8) are true, then ensuring (9) – (15) are not true in an attempt to
avoid an ‘employee’ diagnosis won’t work. It will simply expose you to legal action as
you are not complying with your obligations as an employer.
6. Casual workers
1. Occasionally undertake work for a particular company or business
2. Have no entitlement to be offered work and do not have to accept it
3. Contract describes the relationship as 'casual', 'freelance', 'zero
hours', 'as required' or similar
4. Are under the supervision or control of a manager or director
5. Are expected to perform the work themselves
6. Have tax and National Insurance contributions deducted from wages
7. Use tools, equipment or materials provided by the company
= WORKER
7. Agency workers
1. Undertake work for a business (or multiple businesses) through a
recruitment agency
2. Have a contract with the agency which states that they are not their
employee
3. Have a contract with the agency which does not guarantee that they
will find them work
4. Can decide whether or not to accept or refuse work
5. Have wages paid and tax and National Insurance deducted by the
agency
6. Are paid by the agency when on holiday or receives payment in lieu
of accrued holiday at the end of a contract
7. Can leave the agency or a particular assignment giving little or no
notice
8. Can have an assignment terminated by the end user business with
little or no notice
9. Have signed on the books of several employment agencies
10. Work on a variety of assignments through the year for different
companies
The lack of day-to-day control by the agency whilst on assignment usually prevents
them from being their employee.
Lack of obligation to offer or accept work prevents them from being an employee of
the business they work for.
= WORKER
(Agency workers could be offered an employment contract by a recruitment agency
and would therefore become the agency's employee.)
