An employee is someone who works for an organisation in exchange for compensation. Employees perform a variety of tasks and duties that contribute to the overall operation of the organisation. Common examples of employees include office workers, customer service representatives, and production workers.
Businesses typically hire employees based on their skills, experience, and education. In most cases, employees are entitled to certain benefits, such as holidays, sickness and health insurance. Employees are also subject to certain rules and regulations, such as those governing attendance and conduct.
How an Employee Works
Legally speaking, an employee is someone that works for your business under an employment contract. They have an obligation to regularly complete work, have a minimum number of working hours and will be paid for their time. In return, the business provides them with a steady income and the opportunity to learn new skills and grow their career.
While there are definitely some challenges that come along with managing employees, the benefits far outweigh the costs. Having a strong team of dedicated employees is one of the key ingredients for success in any business.
HMRC have an employed or self employed test, you are counted as an ‘employee’ if:
- You have a regular work pattern with a minimum number of hours
- You get paid for your time
- Have to report to a manager who is in charge of their work
- You cannot get someone to do your work for you
- You are paid holiday leave, sick pay and maternity or paternity pay
- You can enrol in the company pension scheme
- You are bound by company policies, procedures and rules
- You carry out work using tools provided by the business
- You have been issued with a contract that uses the words ‘employer’ and ‘employee’
If you employ someone that doesn’t meet all the above criteria it’s likely that, in the eyes of the law, they are a ‘worker’.
If you work for yourself, you’re classed as self-employed instead.
The Three Main Employment Statuses in the UK
The rules concerning employment status are broadly similar across the United Kingdom, though there may be some slight differences in Northern Ireland. In general, there are three main categories of workers:
- Employee
- Worker
- Self-employed
These include the right under (Employment Rights Act 1996) to receive the national minimum wage, taking paid holidays, and maternity and paternity leave. Self-employed personnel, on the other hand, are individuals who work for themselves and are not under any contractual obligation to an employer. They are not entitled to the same rights as employees, but they do have certain protections under health and safety law.
In recent years, there has been a growing trend of businesses seeking to classify workers as self-employed in order to avoid giving them full employee rights.
This has led to a great deal of debate about the true nature of employment status in the UK.
Employee rights
Employees in the UK have a number of statutory rights under employment law, with some additional protections and allowances, such as:
- Statutory Leave: maternity, paternity, adoption or shared parental leave (workers are only entitled to pay, not leave)
- Minimum notice periods should you be fired or made redundant
- Statutory Redundancy Pay
- Protection against unfair dismissal
- The right to time off for emergencies – events involving a dependant, such as a partner or child
- The right to request flexible working, such as remote working or sharing your job with another person
A set amount of time worked for an employer maybe required before you are entitled to employee rights. Check your employment contract or ask your employer if you’re unsure.
Employment status for tax purposes
It’s important to understand the difference, because it can have a big impact on your taxes and your employment rights. Fortunately, there’s a tool that can help you to figure out your employment status for tax purposes.
HMRC’s Check Employment Status for Tax Tool can help you to quickly and easily determine your employment status for tax purposes. Just answer a few questions about your job and your working relationship, and the tool will give you an answer.
Employee
You’re likely to be classed as an employee if:
- your employer, manager or supervisor is in charge of your workload and says how your work should be done
- you’re required to work regularly unless you’re on leave
- you can expect work to be consistently available
- you cannot refuse to do the work
- you’re employed to do the work yourself
Employees have all the same employment rights as workers do, as well as extra rights and responsibilities, including:
- parental leave and pay
- shared Parental Leave and Pay
- maternity, paternity and adoption leave and parental bereavement leave and pay
- time off for dependants
- time off for public duties
- redundancy pay after 2 years’ continuous service
- being able to claim unfair dismissal after 2 years’ continuous service
- getting the minimum notice period if dismissed or made redundant
- after 26 weeks’ continuous service the right to flexible working requests
- protection against dismissal or suffering any detriment if taking action over a health and safety issue
As an employee, protection is also granted against dismissal or experiencing any ‘detriment’ if you:
- reasonably believe being at work or doing certain tasks would put you in serious and imminent danger
- take reasonable steps over a health and safety issue
- inform your employer about your health and safety issue in an appropriate way
A case for automatically unfair dismissal is granted if you’re dismissed in these circumstances.
Worker
You’re likely to be classed as a worker if:
- your work for the organisation is more casual, for example your work is less structured or not regular
- you’re employed to do the work yourself
- you’re not offered regular or guaranteed hours by your employer
- you have very little obligation to make yourself available for work, but should do work you’ve agreed to
Your employment rights as a worker include:
- written terms (a ‘written statement of employment particulars’) this will outline your job rights and responsibilities
- National Minimum Wage
- paid holiday
- payslips
- protection for ‘whistleblowing’
- protection against unlawful discrimination
- not being treated unfairly if you work part time
You may also be entitled to Statutory Sick Pay (SSP), Shared Parental Pay, parental bereavement pay and maternity, paternity and adoption pay. As a worker, you are not entitled to sick leave, maternity or other types of parental leave, but you can take time off because you do not have to make yourself available for work.
As a worker you also have protection against experiencing any ‘detriment’ if you:
- reasonably believe being at work or doing certain tasks would put you in serious and imminent danger
- take reasonable steps over a health and safety issue, for example complaining about unsafe working conditions
- inform your employer about your health and safety issue in an appropriate way
If the organisation treats you in a detriment way that leaves you worse off, for example:
- your hours are reduced
- you experience bullying or harassment
- your training requests are turned down without good reason
Workers include but not limited to:
- casual workers
- agency workers
- freelance workers (your personal working pattern and circumstance are dependent on how you might be classed as a worker or self-employed)
- zero-hours contract workers (your personal working pattern and circumstances will be dependent on how you might classed as a worker or an employee)
Self-employed
You’re likely to be classed as self-employed if you:
- are responsible for how and when you work
- are the owner of a company or are a freelancer
- invoice for your pay instead of getting a wage
- get contracts to provide services for clients
- are able to send someone else to do the work for you, if appropriate
- are able to work for different clients and charge different fees
If you’re classed as self-employed you also have some employment rights including:
- protection for your health and safety on a client’s premises
- protection against discrimination
You don’t have the same employment rights and responsibilities as employees or workers .
Contractors and freelancers
Self-employed, a worker or employee that gets their work through an agency, might be given a contract for services and be referred to as a contractor.
If this is this case for the duration of the contract you might have self-employed, sole trader, worker or employee employment status, so it’s a good idea to check.
If you work in the construction industry using the trading style as a self-employed contractor or sub-contractor you also have responsibilities under the Construction Industry Scheme (CIS) for tax purposes.
When your employment status is not clear
The type of agreement you have or the nature of your working relationship whether you have worker or employee employment status may not be clear.
For example, if you’re:
- zero-hours staff
- bank staff
- working in the ‘gig economy’ (for example you work through online platforms)
- on a work experience placement or internship
- on a fixed-term or rolling contract
- a piece worker
- peripatetic (have no fixed work base)
- an employee shareholder
- a locum worker
If one of these types of work apply to you, it’s a good idea to check if your situation matches with one of the 3 types of employment status. You need to review any written agreement or documents provided by the organisation compares to the reality of your working relationship in practice.
For example, a written contract may have been issued to you, in which it says your self-employed, but have less control over how, when and whether you work, this means you’re more likely to be a worker or an employee.
Directors, officeholders and volunteers
Different set of employment rights also come into play if you’re a director, officeholder or volunteer.
GOV.UK offer further information if you’re:
- a director
- an officeholder
- a volunteer
Get help
If you’re unsure about your employment status, the Acas helpline can assist you and talk through your situation. They will will explain how the law relates to your situation.
You can also read GOV.UK guidance on employment status and employment rights.
Read more: Self-employed vs employed
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