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Employment Status; Why is it Important?

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Determining your employment status can be crucial as employees will be afforded with certain legal protections that a ‘worker’ or someone who is self-employed will not receive.

There are 3 main types of employment status.  These are:-

  • Employee;
  • Worker; or
  • Self-Employed.

Employment status has been in the headlines in the recent months with staff from companies such as Uber and Deliveroo attending the Employment Tribunals to argue that they should be classed as workers and be given rights associated with this title.

Why is it important to know my employment status?

Employment legislation does not cover self-employed individuals in most cases.

An employee will be given significantly more rights than someone who is self-employed.  An employee has the right to maternity and paternity pay, statutory sick pay, the right to a statutory redundancy payment and more importantly the right not to be unfairly dismissed. Some employee rights will require a minimum length of continuous employment before you qualify for them.  Your employment contract may state how long this qualification period is.

Sometimes an individual will not fall into either the ‘employee’ or ‘self-employed’ category, but rather will sit somewhere in between the two.  This status is known as a ‘worker’.  Workers are entitled to some of the right an employee is given, but not all.  For example, they are not usually entitled to statutory redundancy pay or protection against unfair dismissal.

Determining your employment status is crucial as it may prevent you on losing on out on employment benefits that you are legally entitled to.

How will I know if I am an employee or not?

The definition of an employee is relatively broad so it is usually a decision for an Employment Tribunal to make if a claim is issued.  When the Tribunal considers whether or not an individual can be considered to be an employee, they will ask a number of questions to determine correct status.  These will include:-

  • Whether the organisation is obliged to provide work and whether the individuals are obliged to perform it when offered;
  • The degree to which the individual is under the control of the organisation;
  • Whether individual has any responsibility for hiring additional staff to assist in performing the duties;
  • Whether the individual is paid through PAYE and makes National Insurance payments;
  • Whether the individual is required to perform the work personally and cannot send a substitute;
  • Whether the individual provides their own equipment and resources to carry out the role;
  • Whether the individual receives contractual benefits such as a company car or pension provisions.

If you need any advice understanding your employment status and employee rights do not hesitate to contact a member of our Employment Team.

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