Identifying the Difference between an Employee and Worker

Identifying the Difference between an Employee and Worker

https://www.gov.uk/employment-status

Why care about Identifying the Difference between an Employee and Worker?

Whether or not someone is classified as an employee or worker is important in understanding the obligations your organisation has towards them – and their obligations towards you. 

An employee is under your control at work, and you are required to provide:

  • Sick pay
  • Holiday pay
  • Maternity pay (etc.)
  • A written contract of employment. 

An employee can also claim for redundancy and unfair dismissal (after two years of service). 

A worker still has rights. Workers (as well as employees) have the right:

  • To be paid the national minimum wage. 
  • To get paid holiday. 
  • To receive payslips. 
  • Not to be discriminated against. 
  • Protection against whistleblowing. 
For more detail, see the gov.uk writeup on employment status
https://www.gov.uk/employment-status

Three Tests

Someone is classifies as an “employee” if all three of the following conditions are satisfied. 

Personal Service

An employee is required to perform their tasks themselves, and cannot send a substitute.

Mutuality of Obligation

The employer is obligated to provide work, and the individual obligated to perform it.

Control

The employer exercises a significant degree of control over how the work is carried out.

This means that someone on a zero-hours contract will almost always be a “worker” rather than an employer. 

Practical Differences

If a business is ever sold, only employees will be transferred under TUPE regulations. Workers will not. 

Employers are responsible for deducting tax and NI contributions for employees. Where someone is a worker, they will be paid gross – and will account for their own tax and national insurance through their tax return. 

An employer is liable for acts done by their employees under course of employment. This liability doesn’t extend to workers/contractors.