Status symbols: What are the difficulties in identifying employment status?
A person's employment status dictates their rights and entitlements and also spells out what their employer's responsibilities are towards them. In many cases, this is a straightforward relationship and easy to identify. However, it becomes more complicated for people such as freelancers, who may not have a conventional contract or a permanent role with their employers. They may not consider themselves to be 'employees' but the law might see things differently.
Self-employed people are effectively their own boss and do not have employment rights in the same way as employees and workers. For example, in many cases they can decide themselves how much they are paid and what leave to take. They often have to pay their own tax and National Insurance Contributions.
Confusions can arise because an individual's employment status can be different under tax law and employment law. It is possible that a person may be regarded as self-employed by HMRC, but as a worker or an employee by a tribunal.
It's important to know what a person's employment status is, because an employee is entitled to such benefits as holiday pay and pension provision, where a self-employed person may not be. As there's a certain amount of grey space around categories, identifying status means looking at the nature of the employment relationship in practice on a case by case basis.
It's informative to ask how much control the employer has over the individual; whether anyone else can do the job if the individual can't; the extent to which an individual is part of an organisation; whether the individual uses the employer's equipment and premises; whether there is an obligation on each side to offer and do work; and what the financial risks of the work are. Ultimately, under employment law only a tribunal can give a definitive answer about a person's employment status.
Acas can provide training on the fundamentals of employing people, from Contracts and terms and conditions to Dispute resolution. Visit the Acas Training and Business Solutions area for more information.