Deciding someone’s employment status can be complicated and Employment Tribunals and HMRC may consider different factors when deciding what status you have, as there is no single legal definition. The HMRC published a ‘Supervision, Direction or Control’ Guidance in March 2014 which you can see here.
There are basically three different types of working individuals
- an Employee
- a Worker (someone who works on a e.g. casual basis or is an agency temp)
- or someone who is self-employed (i.e. a freelancer or contractor)
It is important to establish your status, as:
- Employees generally have more employment rights than Workers or those who are Self-Employed (see our Guide to your Employment Rights here).
- There is also a difference in National Insurance contributions, tax and benefits between Employees/Workers and those who are Self-Employed.
It is therefore equally important for Employers to know the correct status of those you employ.
You can of course be employed and self-employed at the same time (you may be an employee during the day and run your own business in the evening; or take a freelance contract with one employer and your next contract is on a PAYE basis). You may also not be self-employed for every job – each job needs to be considered separately. The HMRC can help you in these circumstances.