Main differences between employment and self employment

This article is addressed mainly to individuals who work in the UK and are unsure of their employment status.
As stated on HMRC’s website, in employment law a person’s employment status helps determine: their rights and their employer’s responsibilities.
A person can have a different employment status in tax law and the main types of employment status in the UK are: worker, employee, self-employed and contractor, director and office holder.
We will focus in this article on the main characteristics of employment and self-employment and the essential differences between these two employment statuses. To find more information about the other types of employment mentioned above please click here.

Employee status

HMRC defines an employee as “someone who works under an employment contract” and is also a worker “with extra employment rights and responsibilities that don’t apply to workers who aren’t employees”

The employee’s rights are according to HMRC the following:

• getting the National Minimum Wage
• protection against unlawful deductions from wages
• the statutory minimum level of paid holiday
• 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 they choose
• protection against unlawful discrimination
• protection for ‘whistleblowing’ – reporting wrongdoing in the workplace
• to not be treated less favourably if they work part-time
• Statutory Sick Pay
• statutory maternity, paternity, adoption and shared parental leave and pay (workers only get pay, not leave)
• minimum notice periods if their employment will be ending, for example if an employer is dismissing them
• protection against unfair dismissal
• the right to request flexible working
• time off for emergencies
• Statutory Redundancy Pay

To find out how to work out employment status for an employee please click here.

Self-employment and contractor status

According to HMRC “a person is self employed if they run their business for themselves and take responsibility for its success or failure”.
Also, self-employed workers are not paid through PAYE and do not have the employment rights and responsibilities of employees. Someone can be both employed and self-employed during a financial tax year.

Theresa May’s Letter about European Rights after Brexit7 reasons why you need an accountant for your business?
Recent posts