Summary
- UK employment law recognises three statuses: employee, worker and self-employed contractor, each carrying different rights.
- Status turns on how the working relationship operates in practice, not the label used in a contract.
- Getting status wrong exposes an employer to backdated pay claims, tribunal claims and unpaid tax.
- This guide explains the difference between employees, workers and self-employed contractors for employers in the UK.
- LegalVision’s business lawyers specialise in advising clients on employment status and workforce arrangements.
Tips for Businesses
Assess each engagement on how the work actually happens, not the job title or contract wording. Check control, personal service and mutual obligation. Keep worker and contractor arrangements documented and consistent with practice. Review long-running contractor relationships for signs they have become employment, and correct status before a dispute arises.
In the UK, employment status falls into three categories: employee, worker and self-employed contractor. The category depends on the reality of the working relationship, not the label in a contract. Employees hold the widest rights, including statutory redundancy pay, minimum notice and, once they meet the qualifying period of continuous service, protection from unfair dismissal. Workers hold a narrower set, covering the National Minimum Wage, holiday pay, payslips and protection from discrimination and whistleblowing detriment. Self-employed contractors sit outside most employment rights but keep protection from discrimination and health and safety duties. Getting status wrong exposes employers to backdated pay and tribunal claims. This article will explain the difference between an employee, a worker and a self-employed person.
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What is an Employee?
An employee is an individual who works for you where:
- they carry out work for you under an employment contract;
- you or a manager supervises the work they carry out in terms of what they do and how they do it;
- they are regularly available for work unless taking leave, such as annual leave;
- you have regular work for them to do, which they cannot unreasonably refuse; and
- they must carry out the work personally.
What Right Does an Employee Have?
An employee has the same rights that a worker has but also is entitled to extra rights as follows:
- types of family rights, pay and leave, which include parental, shared parental, parental bereavement, maternity, paternity and adoption leave;
- time away from work for dependents;
- time away from work for public duties;
- statutory redundancy pay where you have employed them for two continuous years;
- the potential to make an unfair dismissal claim where they have been with you for two continuous years;
- right to a minimum notice period in terms of dismissal or redundancy;
- right to ask to work flexibly; and
- in terms of protection against any detriment, they have the same protection as a worker and are protected against dismissal in this respect.
What is a Worker?
A worker is a person who carries out work for you where, for example:
- their work is casual and not regular work for you;
- they personally have to carry out the work you have instructed them;
- you do not offer them guaranteed or regular hours but may have a contract for a specific timeframe; and
- they must do what you agreed on but do not have to be readily available to carry out work for you.
What Employment Rights Does a Worker Have?
A worker is entitled to employment rights. These are, for example, the right to:
- a statement of written terms regarding their rights and responsibilities;
- the National Minimum Wage;
- holiday pay;
- payslips;
- not to be mistreated based on working part-time; and
- protection against unlawful discrimination and whistleblowing.
Although worker status does not entitle an individual to leave, such as sickness, maternity and other forms of paternal leave, they may be entitled to the pay associated with these. If workers want to take time off from the workplace, they can do this because they do not have to readily make themselves available for work.
A worker has protection from experiencing a detriment. This means that you cannot, for example, put them at a detriment if they exercise certain rights, such as making a protected disclosure (whistleblowing) or exercising rights regarding the National Minimum Wage.
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What is a Self-Employed Person?
A self-employed person is someone who:
- is largely in charge of when and how they work;
- either works as a freelancer or owns their own company;
- does not receive a wage but instead invoices for the work they complete;
- provides services to you, usually through a written contract;
- does not have to carry out the work personally; and
- can have a variety of clients and charge a variety of fees.
What Rights Does a Self-Employed Person Have?
A self-employed person does not enjoy the same employment rights and responsibilities as an employee or a worker. However, they do have the legal right to be protected against discrimination, as well as to be protected in terms of their health and safety.
How Employment Status Is Determined
Employment status is not decided by the label in a contract. A tribunal looks at how the working relationship operates in practice. Three factors carry the most weight. Control covers how much say you have over what the individual does and how they do it. Personal service asks whether they must do the work themselves or can send a substitute. Mutuality of obligation asks whether you must offer work and they must accept it.
This matters because getting status wrong is expensive. If a tribunal decides that someone you engaged as a contractor is really a worker or an employee, they can claim rights backdated across the engagement, including holiday pay, the National Minimum Wage and, for employees, unfair dismissal.
HMRC may also pursue unpaid tax and National Insurance. Businesses running a mix of staff and contractors face the highest exposure, so it helps to understand the issues that arise with a mixed workforce of employees and contractors before problems surface.
Key Differences Between Employees, Workers and Self-Employed Persons
While there are similarities between employees, workers, and self-employed people, there are also some key differences. The table below outlines some of the primary differences.
| Employees | Workers | Self-Employed |
| Employees carry out work for you under an employment contract. | Workers can carry out work for you under a casual worker contract. They can also carry out the work under different types of contracts. | The self-employed carry out work for you under a contract that is not an employment contract. Usually, they would be engaged under a contract for services. |
| Employees are entitled to both leave and pay associated with family rights. | Workers are potentially entitled to pay associated with family rights. | The self-employed are not entitled to leave or pay associated with family rights. |
| Employees also have protection during these circumstances against dismissal. | The circumstance in which employees and workers are protected against detrimental treatment is similar. | The self-employed have fewer employment rights than employees and workers. |
| Employees have to personally carry out the work given to them. | Workers have to personally carry out the work given to them. | A self-employed person can delegate the work you give to someone else. |
| Employees enjoy further rights. | Workers have very similar rights and responsibilities to employees. | Self-employed people have fewer employment rights than employees and workers. They have protection against discrimination, and you are still responsible for their health and safety. |
| Employees have to be readily available to work. | Workers do not have to make themselves readily available to work. | The self-employed do not have to make themselves readily available to work. |
| Employees cannot unreasonably refuse the work you offer them. | Workers can refuse the work you offer them. | The self-employed can refuse the work you offer them. |
Key Takeaways
There are different employment statuses in the UK, namely, employees, workers or self-employed. As an employer, you must be aware of the three main categories of employment status to ensure you allow for the correct rights and responsibilities associated with each.
If you need help understanding the difference between an employee, a worker and a self-employed person, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to solicitors to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
What are the three employment statuses in the UK?
UK employment law recognises three statuses: employee, worker and self-employed contractor. Employees hold the widest rights, workers hold a core set such as the National Minimum Wage and holiday pay, and self-employed contractors hold the fewest. Status depends on how the relationship works in practice.
Can a worker claim unfair dismissal?
No. Only employees can bring an unfair dismissal claim, and only once they have the required qualifying period of continuous service. Workers do not have this right, though they are protected from detrimental treatment for exercising certain rights, such as whistleblowing or National Minimum Wage entitlements.
Does a written contract decide someone’s employment status?
No. A contract label does not settle status. Courts and tribunals look at how the relationship works in practice, weighing control, personal service and mutual obligation. Calling someone a contractor does not make them one if they work like an employee.
What happens if I misclassify a contractor as self-employed?
If a tribunal reclassifies your contractor as a worker or employee, they can claim backdated rights such as holiday pay and the National Minimum Wage. HMRC may also seek unpaid tax and National Insurance. Correct arrangements early to avoid retrospective liability.
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