Employed, Self-Employed and Workers – How to identify your working status

As someone who works in the United Kingdom, understanding your employment status is essential, as it determines your legal rights, tax obligations, and benefits. In the UK, there are three primary categories of employment status: employed, self-employed, and workers.

This article will focus on these three categories, including how to identify your working status, the legal aspects of being employed, and the differences between PAYE and invoicing.

Employed, self-employed, and workers - what are they?

Employed

An employed person works under an employment contract and receives a regular salary or wage. The employer deducts income tax and national insurance contributions from their salary, and they are entitled to certain employment rights, such as sick pay, paid holiday leave, and protection from unfair dismissal.

Self-employed

A self-employed person works for themselves and is responsible for paying their income tax and national insurance contributions. They are not entitled to the same employment rights as employed individuals, such as sick pay and paid holiday leave, and they can choose which jobs they take on and when they work.

Workers

A worker is somewhere between employed and self-employed. They work under a contract, but not necessarily a permanent one. Workers receive some employment rights, such as the right to the minimum wage, but not all the rights that employees enjoy, such as protection against unfair dismissal.

Identifying your working status

It's not always clear whether you're employed, self-employed or a worker. To determine your employment status, you need to consider the terms of your contract, the nature of your work, and your working arrangements. Here are some key factors to consider:

Control

If you're told what to do and how to do it, you're more likely to be employed. If you have control over how you carry out your work, you're more likely to be self-employed.

Substitution

If you're required to do the work personally, you're more likely to be employed. If you can send someone else to do the work, you're more likely to be self-employed.

Mutuality of obligation

If you're obliged to accept work when it's offered, and the employer is obliged to provide it, you're more likely to be employed. If you can turn down work, you're more likely to be self-employed.

Equipment

If you're provided with equipment to do your work, you're more likely to be employed. If you provide your equipment, you're more likely to be self-employed.

Financial risk

If you're not responsible for any financial risk, such as equipment, materials or expenses, you're more likely to be employed. If you bear the cost of any financial risk, you're more likely to be self-employed.

Casual/freelance people who are employed over a long period of time

If you've been working for the same employer for a long time but you're not formally employed, you may still be entitled to some employment rights. In the UK, there is a category called "employee by custom and practice." This means that even if you don't have a written employment contract, you may still have a legal right to the same employment rights as a formal employee, including protection against unfair dismissal.