A Short Summary On Employment Status
For first time employers employment status can be confusing. While it is fairly cut and dry for new team members working full time - for other employment arrangements the water can get murkier.
The definition of employment status has implications on both the team member’s rights and the responsibilities of the employer.
This has been a particularly prominent in recent years with the rise of the gig economy. Companies like Uber have sought to define the employment status of their drivers as self employed. This is because the employment status has implications beyond just a label.
There are three main types of employment status:
An individual under a contract of employment with a company and subject to the terms that have been agreed surrounding their role, their hours and pay.
There are certain legislative responsibilities that a company must abide by:
- Holiday pay
- Statutory sick pay (read our resource here)
- Statutory maternity, paternity leave (read our resource here)
- The right to request flexible working
- Protection against unfair dismissal
Note: the majority of people in work are employees.
An individual who has agreed to do some work or provide a service to someone.
Importantly they’re not doing this work as part of their own limited company.
Usually individuals are classed as workers if they’re come through an agency or if the work is short-term and casual in nature.
There are responsibilities on the employer here as well, including:
- Paying the national minimum wage.
- The statutory minimum of holidays (read our resource here).
An individual is an independent freelancer or contractor.
They provide a service to a company as agreed for a fixed amount of time and the individual can work for other companies concurrently.
A self-employed individual is responsible for their own HMRC declarations such as tax and National Insurance. They are not entitled to the benefits as an employed person such as holidays and sick leave.
There are still some protections afforded to the self employed:
- Protection for their health and safety
- Against discrimination
An extensive list on the rights of the employed and the responsibilities of employers is available on the government website.
The majority of employment status’ fall under the categorisation of ‘employed.’ In these instances it’s simpler to handle as an employer as it’s likely the company is well versed managing the requirements.
More attention is needed in the exceptional cases where it is not as clear what exactly the rights of the team member are. It’s here that the company can find themselves in a trickier situation. Being aware when bringing a team member on board that they are not classed as “employed” is the first step.