Commonly asked questions on the legal issues relating to fixed-term work
An individual doing paid work in the UK falls into one of three main categories:
- an employee
- a worker
Some employers are understandably uncertain about the differences between ‘workers’ and ‘employees’ and the different rights which apply to them. These differences are determined by what are known as ‘common law tests.
Employment status is significant because employers will be liable for the majority of employment rights if those working for them are employees rather than self-employed.
The definition of 'employee' and 'worker' differs slightly from one area of legislation to another, but generally workers have fewer rights than employees. However, if rights apply to a worker they usually also apply to an employee. The basic employment rights for employees and workers are listed below.
People are classed as employees if they work under a contract of employment. A binding contract can be created in writing, or verbally, or be a mixture of both, but certain terms do then have to be put into writing within two months of the employee starting work.
The definition of ‘employee’ contained in employment legislation is unhelpful. For example, the Employment Rights Act 1996 (section 230:1) defines an employee as ‘an individual who has entered into or works under (or, where employment has ceased, worked under) a contract of employment.’ The issue of employee status therefore has to be established on a case-by-case basis in accordance with the various legal tests which have evolved over the years – the case involving Uber drivers and subsequent case law on this issue illustrate how important court and tribunal judgments are in this area (see below and also QHow do employers determine if an individual who already works for them is an employee?).
The majority of people in work are employees. For example, a digital marketing manager who has worked exclusively for a company for five years between 9am and 6pm at the company’s offices is likely to be an employee, even if she only works part-time for three days a week.
Employee rights include:
- protection againstunfair dismissal
- statutory redundancy payment
- maternity and paternity leave and pay
- parental leave
- the right to request flexible working
- rights under TUPE
- rights to preferred payments in the event of an employer's insolvency.
(For a full list of employees’ and workers’ rights, go to Q Is there a complete list comparing employee and worker rights?)
The term ‘worker’ has a distinct legal meaning.
A worker is any individual who undertakes to do or perform personally any work or service for another party, whether under a contract of employment or any other contract. It does not matter if the contract is express or implied, verbal or in writing, provided the individual undertakes to perform the work or services personally, for an end-user who is not a client or customer. This normally excludes those who are self-employed. (This is based on section 230(3) of the Employment Rights Act 1996, but the definition of worker varies from statute to statute.)
Agency workers and short-term casual workers are likely to be workers, unless they are found to be self-employed.
For example, a carpenter working for a building company on several occasions over the course of a year was required to perform the work personally under the direction of the company, and was paid on a ‘time worked’ basis, rather than by reference to the work she performed. She was, therefore, more likely to be a worker than an employee (see Q How do employers determine if an individual who already works for them is a ‘worker’?).
Workers are entitled to some rights and protections, including the national minimum wage, paid annual leave, rest breaks and protections for part time workers.
For example, a carpenter worked for a building company on several occasions over the course of a year. She was required to perform the work personally under the direction of the company, and was paid on a time basis rather than by reference to work performed. She is therefore likely to be a worker, but not an employee (see Q How do employers determine if an individual who already works for them is a ‘worker’?).
A wide range of individuals who suffer discrimination may be protected by equality laws even if they are self-employed or a job applicant.
Separate legislation covers ‘temporary workers’, in particular the Agency Workers Regulations 2010 (SI 2010/93). For more information see our Temporary workers Q&As.
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