Your legal rights and entitlements at work can differ significantly depending on whether you are classed as an employee or worker.
Below we look at the difference between these two particular types of employment status, including how your legal status as either an employee or worker can impact your rights and responsibilities within the workplace, as well as your tax status. We also examine how to check under which category you are classified.
An employee is someone who works under a contract of employment, ie; an agreement setting out the terms and conditions governing the working relationship between the employer and employee, including the rights and obligations between the parties. This is also referred to as a contract of service.
You will usually be classed as an employee if you have an employment contract, either verbally or in writing, whether permanent or fixed-term, under which you are provided with regular work that you are personally required to undertake under the terms of that contract.
Presently, there is no single legal test to determine if you are either an employee or worker but, broadly speaking, an individual will be classed as an employee in circumstances where they satisfy all of the following three principle tests:
Personal service The individual must be required to provide their services personally, rather than being able to subcontract the work to someone else
Mutuality of obligation The employer must be obliged to provide the individual with work, and the individual must be obliged to do that work, in return for an agreed sum of wages, and
Control The employer must exercise a sufficient degree of control over the way in which the individual carries out the work, on terms and conditions laid down by the employer.
In the event that you satisfy some but not all of these three tests, you may be considered a worker. If you do not satisfy any of the tests, you are likely to be classed as self-employed, rather than as either an employee or worker.
Where the employment arrangement is far more casual, in other words, the employer is not required to provide the individual with work, and the individual is not required to do any work, they are much more likely to be classed as a worker rather than an employee.
As such, the worker category is much broader than the employee category and can include the following:
- , whereby an agency finds their work and pays their wages
- Short-term workers, hired directly by an employer and who supply their services on an irregular or casual basis with minimum guaranteed hours
- Freelance workers, where those who are self-employed for tax purposes may still be classified as workers for employment rights purposes
- Home-workers or piece-workers, although these types of workers have even less statutory rights than a normal worker
In particular, you will be classed as a worker if you have a contract where you are personally required to perform work or provide a service for payment or reward, but where there is very little or no obligation to receive or do any work under this contract, and with no adverse consequences if the work is refused.
It is the ability to accept or reject any offer of work, or the lack of mutuality of obligation, that usually distinguishes a worker from an employee. Indeed, businesses will often use contracts that exclude this principal element to avoid individuals acquiring employment status.
That said, while the terms of any written contract will be the starting point in determining employment status, a court or tribunal asked to decide the question of status can still look beyond the contract if there is clear evidence to show that it does not reflect the true relationship between the parties.
The legal distinction between an employee and a worker can be crucial in determining your rights and responsibilities within the workplace, not least because many employment rights stem from an individual having ‘employment’ status, with workers having lesser rights than employees.
Although all employees are, in fact, also workers, as a sub-category of workers employees have additional statutory employment rights that do not apply to workers who aren’t employees. Indeed, only employees are entitled to all statutory employment rights.
That said, as either an employee or worker you are entitled to the following:
- To be paid the national minimum wage
- To receive a payslip (for workers, as of April 2019)
- To protection against unlawful deductions from wages
- To the statutory minimum level of paid holiday
- To the statutory minimum length of rest breaks
- To not work more than 48 hours on average per week, or to opt-out of this right if you so choose
- To protection against unlawful discrimination
- To protection for whistleblowing, ie; reporting wrongdoing in the workplace
- To not be treated less favourably for working part-time
- To be accompanied at a grievance or disciplinary hearing
As an employee or worker you may also be entitled to statutory sick pay, statutory maternity or paternity pay, as well as statutory adoption pay and/or shared parental pay. However, this is where the similarities effectively end.
It is only as an employee that you will benefit from the following additional statutory rights, for which some will require minimum qualifying period:
- To a minimum notice period if your employment is being terminated, for example, if your employer is dismissing you
- To protection against unfair dismissal
- To the right to request flexible working
- To time off for emergencies
- To statutory maternity, paternity, adoption and shared parental leave, whereby a worker is only entitled to pay and not leave
- To statutory redundancy pay
Your legal status as either an employee or worker can significantly affect your employment rights.
Below we examine the main statutory rights that an employee will benefit from as a special sub-category of worker, from the minimum notice period to statutory redundancy pay.
Minimum notice period
As an employee you will be entitled to the notice stated in your contract of employment or the statutory legal minimum notice period, whichever is the longer.
The legal minimum notice required to dismiss an employee is one week if they have been employed between one month and two years, or one week for each complete year of employment up to a maximum of twelve weeks.
An employer can only dismiss an employee without applying the minimum statutory notice period in circumstances where the employee has committed an act of gross misconduct, ie; an act so serious that it justifies dismissal without notice, for example, theft or violence.
Protection against unfair dismissal
As an employee you are protected against unfair dismissal, in other words, being dismissed for a reason, or in a manner, that is considered unfair. In most cases, you will need to have completed a minimum of two years’ continuous service to be able to bring a claim for unfair dismissal, unless you can show the reason for dismissal was automatically unfair.
By way of example, it would be regarded as automatically unfair to be dismissed because you are pregnant or on maternity leave. Here, a claim for automatic unfair dismissal does not require a minimum length of service.
It would also be classed as unfair if your employer failed to undertake proper investigations into, for example, allegations of misconduct or underperformance, or where you are not afforded an opportunity to counter any such allegations. In other words, where your employer fails to follow reasonable procedures during the disciplinary and dismissal process, you may have a claim for unfair dismissal.
In either case, you may be entitled to seek an award of damages from an employment tribunal and, in some circumstances, even reinstatement.
The right to request flexible working
As an employee, with the required minimum length of service of at least 26 weeks at the time of making their request, you have the right to request flexible working. This refers to working in such a way that suits an employee’s individual needs, for example, flexi-time, working from home, working part-time and job-sharing.
All qualifying employees have the legal right to ask their employer for flexible working arrangements, although this is the right to ask and not necessarily the right to be granted your request.
That said, having submitted a request for flexible working, your employer is obliged to deal with your request in a reasonable manner. In other words, they must assess the advantages and disadvantages of your application and hold a meeting to discuss your request directly with you. Your employer must also provide an appeal process to allow objections to be raised against any refusal.
Time off for emergencies
As an employee you will be entitled to limited time off to deal with an emergency involving a dependant. This could be to care for a child or grandchild, your spouse or partner, a parent, or anyone who depends on you to care for them.
How much time off you will be allowed is not statutorily defined, rather it is a reasonable amount to deal with the emergency in question. It will all depend upon the situation and, as such, will often be dealt with on a case-by-case basis.
Statutory maternity, paternity, adoption and shared parental leave
As an employee, albeit subject to the required minimum length of service where relevant, you may be eligible for both statutory maternity pay and leave, or other similar rights relating to pregnancy or adoption.
Qualifying employees can take up to 52 weeks’ maternity leave, together with up to 39 weeks statutory maternity pay. In respect of paternity leave, eligible employees can choose to take either 1 week or 2 consecutive weeks’ leave after the birth or adoption of the child, together with paternity pay.
Some employees may also be eligible for shared parental leave. This enables an employee to ‘sacrifice’ part of their maternity leave to allow the other parent to stay at home and care for the child, or even to allow both parents to be at home at the same time.
Statutory redundancy pay
Subject again to a minimum length of service, as an employee you may have certain redundancy rights. Redundancy is when you potentially face dismissal because your job no longer exists. This might be because your employer is doing things in a different way, changing location or even closing down.
In these circumstances, you may have a number of rights, not least all qualifying employees under notice of redundancy have the right not to be unfairly selected for redundancy and to reasonable time off to look for a new job, not to mention the possible right to redundancy pay depending on your length of service.
Deciding someone’s employment status can be complicated, not least because there is no single legal definition for either an employee or worker. As such, various different factors can come into play when determining an individual’s legal status within the workplace.
That said, you are more than likely to be classed as an employee if some or all of the following circumstances apply to you:
- You have a written contract of employment or statement of terms and conditions, which may be described as an “employment contract” and may use words like “employer” and “employee”
- You are required to attend work on a regular basis, unless you are on leave, for example, annual, sick or maternity leave
- You are required to do a minimum number of hours and expect to be paid for the time worked
- Your employer is required to provide you with regular hours or work
- You are expected to carry out this work yourself, ie; you are not permitted to use a substitute to undertake the work for you
- You are not permitted to refuse to work or refuse to come to work
- Your employer is in charge of how, when and where you work
- Your employer not only provides the work you must do, but any tools, equipment, materials, facilities and uniform required to do that work
- Your employer deducts tax and national insurance out of your wages under the Pay As You Earn (PAYE) system.
Alternatively, you will usually be classed as a worker in the following circumstances:
- You have a contract or other arrangement to personally undertake work or services for a reward, whether this be verbally or in writing, which may use words or phrases like “casual” or “as required’
- The business is not required to offer you work and you are not required to accept it, in other words, you only work when you want to
- The business is not required to offer you regular or guaranteed hours
- You are required to carry out the work yourself, ie; you cannot subcontract to someone else
- Having accepted work, your employer is usually in charge of how, when and where you work
- The business provides the tools, equipment, materials, facilities and uniform required to do that work
- The business deducts tax and national insurance out of your wages.
In the event that you are unsure about your employment status, ie; whether you are an employee or worker, or even if you are self-employed, you should seek advice from a trade union official or through the Advisory, Conciliation and Arbitration Service (Acas). Acas provides free and confidential advice on employment rights, best practice and policies, and resolving workplace conflict.
Our employment law specialists offer advice and guidance to employees and workers facing issues at work. If you have a question about your employment rights or a specific workplace legal issue, contact us.
Last updated: 30th November 2019