Employee, Worker or Self-Employed – What Are the Key Differences

Although the work that they carry out can be very similar, employees, workers and self-employed people have different employment rights and responsibilities.

The following guide explains the differences between being an employee, a worker or a self-employed person, highlighting some of the key employment rights and responsibilities of each category.

What is an employee?

Most people who go to work on a daily basis will be classed as employees. A person is likely to be regarded as an employee if the majority of the following statements apply to their working situation:

• The work is regular and ongoing other than for leave such as annual holiday, maternity or sickness.
• They work a minimum number of hours in exchange for payment
• Their workload is managed by somebody else and is clearly set out. 
• The worker cannot replace themselves with another person if they are to be absent.
• National Insurance and tax is deducted from their pay
• They receive annual paid holiday
• A pension scheme is offered to them
• They have the right to receive maternity or paternity pay as well as statutory or contractual sick pay
• Any disciplinary processes apply to them
• Their work is carried out at the work premises, or at an alternative agreed address
• Redundancy procedures are set out in their employment contract
• They only work for one firm, or if they have a second job, it is completely different to their first and not for a competitor.
• The employer provides the tools and materials required to complete their work
• Their contract refers to them as an ‘employee'.

What is a worker?

A worker, unlike an employee, is more likely to work on an irregular or casual basis. It is likely that a person is a worker if the majority of the following applies to their situation:

• They occasionally work for an employer or multiple employers
• They are not obliged to receive offers of work, and they do not have to accept offers of work if they are made. They are only required to work as and when they want to.
• A contract of work contains terms such as ‘freelance', ‘zero hours', ‘casual' or similar phrases
• Verbal or written agreement to the terms of work must be agreed.
• They can't arrange for a replacement worker to cover their work in their absence
• They are supervised by a director or manager
• National Insurance and tax is deducted from the worker's pay
• The materials and tools needed to complete the work are usually supplied by the employer.

What is the definition of a self-employed person?

A self-employed person has far fewer rights and entitlements than those offered to workers and employees. It is likely that a person is classed as self-employed if the majority of the following statements are applicable:

• They bid or offer quotes to complete set tasks
• They do not receive sick pay or holiday pay when they are not working
• They make independent decisions on how to complete specific tasks and pieces of work
• They can arrange for a replacement person to complete the work if needed
• They do not receive direct supervision while they complete their work
• They file invoices after the completion of tasks
• They pay their own tax and National Insurance
• They amend or redo work that is deemed to be unsuccessful or unsatisfactory by the employer.
• They can work for as many or as few clients as they choose.
• A contract of work will have terms such as ‘self-employed', ‘contractor' or ‘consultant'.

Why is important to know the difference?

It is important to understand which category your employment relationship falls in, as it will impact upon the rights that you have.

Employees benefit from the most protection when it comes to employment rights and legislation. This includes rights to a minimum wage, annual holiday, sick pay and protection against discrimination.

Workers are covered by many of the same protections that are offered to employees, but there are some notable exceptions which are highlighted below.

People who are self-employed on the other hand have very few employment rights in comparison. But they do have more freedom and flexibility, as technically being self-employed means you are your own boss.

Employment rights of both employees and workers

As mentioned above, there are many employment rights that people will benefit from regardless of whether they are classed as an employee or a worker. This includes the following:

• Be paid the minimum wage
• Receive paid annual holiday
• Receive rest breaks
• Have a maximum hours arrangement per week
• Be limited to the night shifts that they are required to work
• Have their wages protected from unlawful deductions
• Be protected against unlawful discrimination in the workplace
• Receive protection against whistleblowing
• To be accompanied to any disciplinary or grievance meetings.

Additional employment rights of employees

In addition to the rights listed above, people classed as employees also receive the following benefits under employment laws:

• Rights against unfair dismissal
• The right to receive redundancy pay
• Statutory sick pay
• The right to request flexible working arrangements
• Time off to support or care for any dependants
• Maternity, paternity and adoption pay and leave
• Written explanations for dismissals
• Written statements confirming the terms of employment
• Itemised pay slips
• Time off should public duties require