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Operations

Types of employment status

Melissa Jones  |  30 November, 2017

What is an employment status?

When an employer hires someone it is up to them to assign their new hire with an employment status. A person’s employment status defines the rights and responsibilities that an employee has at work, and therefore determines what is required from the employer. Employees will have different rights depending on their employment status.

Types of employment status

As the way people work has been evolving with increased flexibility and greater options, so have the types of employment status’. However, there are still three main types of employment status that a person will fall into. They are:

  • Employee
  • Worker
  • Self-employed

Employee

An employee is a person who works under the conditions of a contract of employment. The contract will include, but is not limited to, terms of payment, annual leave and working hours. For a contract to be binding, the terms should be put in writing and presented to the employee within two months of them commencing work. Although the contract can be formed of a mixture of verbal and written terms, it is best practice to put it all in writing.

There is often confusion surrounding the differences between an employee and a worker. It is important to remember that all employees are workers, but employees have extra employment rights that don’t apply to workers who aren’t employees. Employers should be aware of the employment status of the people working for them as they are liable for the majority of employment rights for their employees.

Employees are entitled to the same rights as workers plus:

Worker

A worker is a person who undertakes work personally as part of a contract or indeed not. They generally have to carry out the work themselves but do have a limited right to sub-contract the work to someone else.

Typically workers include casual workers, zero hour contract workers, agency workers, freelancers and seasonal workers.

The rights that workers are entitled to include:

  • Receiving the National Minimum Wage
  • Statutory minimum holiday pay
  • To not work in excess of 48 hours a week on average, or have the option to opt out of this right if they so choose
  • To not be treated less favourably if they work part-time
  • Protection against unlawful discrimination
  • The statutory minimum length of rest breaks

Self-employed

A self employed person does not have the same employment rights as a worker or employee. They will run their own business and typically will be contracted to service a client. An individual however, can be both an employee and self-employed at the same time. For example they could work for an employer during the day and work for their own business in the evenings.

Someone who is self-employed is their own boss. It’s because of this that in most cases they aren’t covered by employment law. However, a self-employed person is entitled to:

  • Protection for their own health and safety
  • Protection against discrimination (in some cases)
  • Their rights and responsibilities set out in their contract with their client

In general the self-employed are not entitled to receive holiday pay.

It is important for employers to know and understand the employment statuses of their employees and their rights and responsibilities to their people. With the rise in the gig economy, companies are being caught out by not knowing the basics. Uber recently lost their appeal over their driver’s employment status, ruling them as ‘workers’ rather than Uber’s claim that they are self-employed.

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