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Self-employed

There are a number of employee/employer relationships which are now different from the traditional 9-5 job. A person's employment status will determine their rights and their employer's responsibilities.  

A genuinely self-employed person will have few employment rights, their rights are governed by the terms and contract that they enter into with the party who engages them.

Key points

  • Self-employed people are in business for themselves, providing a service to clients with more control over how, when and by whom the service will be delivered.
  • Self-employed people will account for their own tax and National Insurance payments.
  • People can be both employed and self-employed at the same time, for example they can work for an employer during the day and run a business on evenings and weekends.
  • A contractor could be self-employed, a worker or an employee depending on whether they work for a client and are employed by an agency.

Although a self-employed person will not have the same employment rights and responsibilities as employees or workers, a self-employed person:

  • still has protection for their health and safety on a client's premises
  • in some cases will be protected against discrimination
  • will have their rights and responsibilities set out in the terms of the contract with their client
  • in general will have not have the right to holiday pay
  • may in limited cases be self-employed for tax purposes but classed as a worker or an employee for employment rights.

Legal decisions on employment status

Only a court or employment tribunal can make a final decision on someone's employment status. Someone can still be classed as an 'employee' or 'worker' even when they are taxed on a self-employed basis. The court or tribunal will look at the employment relationship between the person and business.

Self-employed or contractor

A self-employed person will run their own business and take responsibility for the success of the business, and are more likely to provide a service for a client.

A person may be classed as self-employed or a contractor if:

  • they bid or provide quotes to secure work
  • they decide when and how to do work
  • they are responsible for their own tax and National Insurance
  • they do not receive holiday or sick pay when unavailable for work
  • they provide the main tools, equipment or materials that are needed to complete a job.

Contractors can be self-employed, a worker, or employee if they work for a client and are employed by an agency. There is a special scheme for self-employed contractor and sub-contractors in the construction industry. Under this the Construction Industry Scheme contractors deduct money from a subcontract as advance payments towards their tax and National Insurance. This scheme covers most construction work to buildings, including site preparation, decorating and refurbishment.