There are a number of factors which determine whether or not a contract is one of employment.

The essential elements are:

  • there must be a mutuality of obligations between the parties
  • there must be a sufficient degree of control over the individual
  • the contract must impose an obligation on an individual to provide work personally.

The manner in which the parties describe themselves and their intentions will not be decisive if, in reality, they are treated no differently than employees carrying out the same role or function. If the day-to-day reality of the work suggests a relationship of employment, the individual working under it will be classed as an employee.

The tax treatment of an individual providing services depends on their status. If the parties claim it is one of self-employment for tax purposes, this does not mean a Tribunal will find that no employment exists.

Employees

  • there is an obligation on the employer to provide work and an obligation on the employee to accept that work.
  • an employee is commonly subject to the employer’s day-to-day direction and rules and policies, particularly in relation to standards at work.
  • they are generally required to provide personal service; they cannot provide a substitute.
  • an employee will not normally be permitted to work for other employers whilst under contract, at least without the express permission of the employer.

Workers

  • there is no obligation on the employer to provide work or the worker to accept work
  • the employer still retains an element of control over the worker
  • the workers have the right to holiday pay, sick pay, national minimum wage and rights under the working time regulations.

Self-employed individuals or independent contractors

  • self-employed individuals do not enjoy the same statutory rights as employees and workers
  • they are less likely to be subject to the same controls or supervision that would be exercised over an employee
  • they will typically have the flexibility to choose whether or not they wish to accept work
  • a self-employed individual is usually able to provide a substitute
  • they will usually have the freedom to provide services to whichever clients they wish without operating exclusively for one company.

Atypical Workers

Atypical work is any pattern of work which does not fit the traditional concept of an employee working full-time for a single employer. There are many forms of atypical working and the rights of the individual will be determined by their status (employee, worker or self-employed).

Further advice

Our specialist employment lawyers can advise on all aspects of employment status, self-employment and atypical working. For a free, no obligation fact finding meeting, complete our online enquiry form or call 0800 915 6037.


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