Are you an Employee or Self-Employed and why does it matter?
Whether you are an employee or self-employed will be important when determining the employment rights that you have.
An employee enjoys more employment rights, both statutory and contractually, that an individual that is self-employed and just because your contract states that you are self-employed does not necessarily mean that you are. A disagreement will frequently occur when an individual is dismissed and wants to bring a claim against the company that has dismissed them and as an employee you will have the right not to be unfairly dismissed, after the qualifying period, but if you are self-employed you do not have the right not to be unfairly dismissed.
It is also important for employers to ensure that they are paying staff correctly in terms of whether they are employed or self-employed as this can have major implications in terms of tax, PAYE and National Insurance liabilities.
So, what is an employee?
An employee is an individual that has personally entered into, or works under, a contract of employment whether that contract is in writing or oral and that employee must be under the control of the employer. The contract will be based on mutual obligation where the employer is obliged to provide work for and pay the employee and the employee is obliged to personally carry out the work.
Employee or Self-Employed? The Test…
There is no definitive question or test that will evaluate your status as an employee or self-employed individual but some of the questions that will be considered when evaluating your status include:-
Do you have to attend or provide the contract services personally or can you send a replacement?
If you have to attend in person or are personally expected to carry out the work or services then this is a good indication that you are an employee. If you are able to send someone else in your place then this would suggest that you are not an employee.
How much control does your employer, or the company, have over you (in terms of what work is carried out and when, hours worked, place of work, holidays etc.)?
Generally, the more control that the employer or company has over the work that you do, the hours and times that you work and your holidays the more likely you are to be an employee rather than self-employed.
Do you receive employee benefits or incentives (paid holiday, pension, grievance and disciplinary procedures)?
If you receive benefits from the company, particularly paid holiday or paid sick leave, or are subject to the staff policies and procedures then this is an indication of being an employee.
How have you been integrated within the company and with other staff?
It is expected that employees would be integrated within the firm and with other members of staff whereas this would not usually be the case with self-employed individuals.
Are you paid on a regular basis without having to provide an invoice?
If you are paid regularly by the company, usually weekly or monthly, and are paid without having to invoice the company for the hours that you have worked then this is a strong indication that you are an employee.
Who provides the equipment and items for you to use in order to carry out your work?
If the company provide you with all of the equipment and items that are necessary for you to fulfil your duties then you are likely to be an employee. If you have to provide your own equipment and are responsible for providing your own staff to help complete works then this is likely to indicate that you are self-employed.
Are you able to work for anyone else?
If you are only able to work for one company and are not to take on work for anyone else or any other contracts then this is likely to be an indication of being an employee.
However, answering one or two of these questions and getting an indication of being an employee will not be enough to form a conclusive opinion and the whole picture is used when evaluating your status. No specific weight is given to any individual question and so all the circumstances of each individual case will be considered to build a picture of the relationship between the company and the individual and ascertain their status as an employee or self-employed individual.