Worker or Employee? – What is the difference?

If you are taking on people to help you in your business you need to know whether they will be a worker or an employee.  Worker and employee are two different statuses of employment and each have different rights which a business owner or employer should be aware of.

So how do you distinguish between each employment status?

A Worker

A person is classed as a worker if any of the following apply:

• An arrangement (or verbal or written contract) is made for the worker to provide services for a reward (monetary, a benefit or a promise of future work)
• The employer has to provide work for them for the length of the contract or agreement
• The worker has to turn up for a work even if they don’t want to and cannot replace themselves with another worker
• The work is classed as casual, freelance or zero hours or irregular and does not have to be offered by the employer nor accepted by the employee
• The business provides equipment and materials to do the job
• They are under the supervision of a manager
• Tax and National Insurance is deducted from their wages

An Employee

A person is an employee if any of the following apply:

• They are expected to work regularly for a set number of hours and are paid for those hours at the company’s premises 
• A manager is responsible for the work the employee does
• They are provided with equipment and materials to do their job
• They are not able to replace themselves with someone else
• Deductions are made from their pay for tax and National Insurance
• They are entitled to join the company pension scheme
• They are entitled to take paid holiday
• They are entitled to statutory payments such as sick pay, maternity pay, paternity pay, etc

These two statuses appear very similar but each has different rights.  

Workers

• Are not entitled to a notice period nor statutory redundancy pay
• Are not entitled to protection against unfair dismissal
• Do not have the right to request flexible working
• Are not entitled to time off for emergencies
• Are not entitled to maternity or paternity leave
• Must receive the minimum wage
• Must receive statutory paid holiday
• Must have statutory minimum rest breaks and must not work more than 48 hours per week unless they choose to opt out
• They may be entitled to statutory payments

Employees

In addition to the rights of workers employees are entitled to the following:

• All statutory payments including redundancy pay
• A minimum notice period
• Protection against unfair dismissal
• The right to request flexible working
• Time off for an emergency relating to a dependant

It is important to be aware that some rights require a minimum length of continuous employment.

The status of your worker or employee can be complex and it is important to get it right because you and the person you employ could be liable for tax and penalties if the employment status is incorrect.

Self-employed workers do not fall into either of these categories.  A person cannot choose to be self-employed when they work for a company.  A person is self-employed if they run their own business, have customers and take responsibility for its success or failure.  They are responsible for registering with HMRC and paying their own tax and National Insurance.

You can check the status of your worker or employee on HMRC’s website using the employment status check.