An Employee or Self Employed?

Establishing the legal definition of the people who work for you is vital and it is key to make this clear right from the start.

Generally, there are three main categories:

  1. Employees
  2. Casual Workers
  3. Self Employed

A worker’s employment status, that is whether they are employed, a casual worker or self-employed, is not a matter of choice. Whether someone is employed or self-employed depends upon the terms and conditions of the relevant engagement. As an ‘engager’, it is the organisations responsibility to correctly determine the employment status of its workers.

The dividing line between the three is not based on any single point but is decided by looking at the reality of what they do.

  • For example, if someone turns up to work on regular set hours, uses the organisations equipment and does the work themselves without ever sending a substitute, then they are probably an Employee and should be treated as such in terms of employment law and PAYE.
  • On the other hand, if a firm or an individual is engaged, they use their own equipment and materials, can send different people and do their work in hours that suit them then they are probably Self Employed and liable to look after their own tax affairs.
  • If, however, the role is ‘as and when’ you need them, can turn down the shifts you offer, does the work in person and cannot send a substitute then they are probably a Casual Worker. These are people who provide services in person on an ‘as and when’ basis with no guarantee of work from the employer and no need to accept all or any of the work that is offered.

The main difference between an employee and a worker is, to quote employment jargon, that there is ‘no mutuality of obligation’. In other words, an employee has to come in when they are rostered to work, whereas a worker can choose to turn down the shifts you offer.

Another way of describing this is that an employee is subject to a ‘master and servant relationship’ whereas a worker provides a service in person and can turn the work down. A freelance writer is a good example.

In some cases, self-employed people can become workers too – the Uber drivers, for example. Workers do not have the full rights of employees but are subject to Tax and NI in the same way, accrue holidays and have other rights such as protection against unfair deduction of wages.

Also be aware that all categories of employees, workers and contractors are protected against harassment and discrimination when working on your premises. The organisation has to take the correct measures to prevent discrimination. For example, if an outside contractor harassed a staff member and the organisation took no action, it could ultimately be liable if that staff member made a complaint.

Note though that if a self-employed person falls into a regular pattern of work, they may well become a worker and accrue holiday pay etc. In that case take advice from a Perspective HR advisor.

Unfortunately, there is currently a lot of case law in this area and it is fast moving given the recent upsurge in different working practices. Specialist advice is usually a must in this area given the implications for your organisation.

Note: This is only a guide to the issues that can apply. What happens in reality will always trump the contract a self-employed person, casual worker or employee has. In some cases, it can be down to an employment tribunal to decide the status of a worker.

If you require any further information or have any questions, please contact us by emailing or by phoning 01392 247436.

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