Employment Status in Nottingham
What is Employment Status?
In UK employment law, there are three principal categories of employment status:
- Employees working under a contract of employment, who have full employment rights.
- The genuinely self-employed, who are independent contractors.
- Workers, who have a status in between employment and self-employment.
But labels don’t determine employment status – that depends on the terms of the contract and how the arrangements operate in practice.
Organisations may have all three categories. For example, a chief operating officer, reporting to the chief executive, and fully integrated within the business, is likely to be an employee. A freelance designer, running their own business, and working for other clients, is likely to be self-employed. Sales representatives, receiving a retainer and commission, maybe workers.
There are also other types of status, such as partners, directors and members of limited liability partnerships (LLPs).
Why do people professionals need to know about employment status?
Typically, employment status issues occur when there is a dispute between an organisation and an individual working for it – otherwise, working relationships can continue for years without any certainty about employment status.
Modern working practices, such as zero-hours contracts, and the supply of labour via digital platforms, are bringing employment status under increasing scrutiny. Growth in the gig economy where payment is per job, and workers lack guaranteed hours and job security, has led to a stream of tribunal cases.
All organisations need to understand the difference between the employment rights of employees, the self-employed and workers.
Which status applies also has significant tax implications.
How do employment rights differ according to employment status?
Employees have the right to:
- Protection against unfair dismissal.
- A statutory redundancy payment after two years’ service.
- Minimum statutory notice.
- Statutory maternity, paternity, adoption, shared parental leave and pay, and statutory sick pay.
- TUPE protection (provided TUPE applies to the transfer of undertakings concerned).
- Request flexible working.
- Paid time off for trade union duties and for ante-natal care, and unpaid time off to deal with emergencies for a dependant.
Both employees and workers are entitled to:
- National Minimum Wage/National Living Wage.
- A written statement of terms on the day the contract starts – workers, as well as employees, have this right from 6 April 2020.
- An itemised payslip on or before the day payment is made – from 6 April 2020.
- Working time rights, such as weekly and daily statutory rest breaks, and a 48-hour maximum working week (although they can choose to opt-out and work for longer).
- A companion during a disciplinary or grievance hearing.
- Protection from discrimination and from mistreatment following whistleblowing.
- Protection from unlawful deduction from remuneration.
- Health and safety protection.
- Auto-enrolment on to a pension scheme.
- Paid annual leave.
Self-employed contractors have no employment rights, apart from:
- Health and safety protection.
- Protection from discrimination (in some cases) and from mistreatment following whistleblowing.
How can Seagrave French help you?
How can Seagrave French help you?
“Getting employment status wrong is one of the most expensive tax mistakes”
The question as to whether someone is employed or self-employed is not as straightforward as it might at first appear. Many people assume they are free to choose, but this is not the case.
Although there is no clear-cut answer as to how you decide if you are self-employed or not, the following should be on your checklist
Fundamental factors to consider:
- The right to get a substitute or helper to do the job;
- Mutuality of obligations.
- Other factors to consider:
- Provision of equipment;
- Financial Risk;
- Basis of Payment
- Opportunity to profit from sound management;
- Part and parcel of the organisation;
Right of dismissal;
- Employee benefits;
- Intention of the parties;
- Length of engagement.
These are often matters of general employment law and not specific tax legislation. There is an enormous amount of Case Law in this area and HMRC are not always right. HMRC do not have the final say on whether somebody is self-employed or not. We can argue your case and take it before the Tax Commissioners for you.
The cost if you get it wrong is enormous. Not only is there the question of employees and employers national insurance, being classified as an employee also gives rise to all sorts of employment rights such as holiday pay, maternity pay, unfair dismissal etc. The decision has to be made by the employer and if you get it wrong it is going to be very hard to recover the back tax, interest, penalties etc from the worker.
We can review your existing arrangements and give you our opinion on whether it will stand up to attack from the Taxman. We can help advise on contracts for services to assist you and advise on how you can maximise your chances.
Employment Status Types
Employment status types refer to the various categories of work arrangements that exist in the labor market. Here are the most common employment status types:
Full-time employee: This is a worker who works a standard number of hours each week, usually between 35 and 40 hours, and receives benefits such as paid time off, health insurance, and retirement plans.
Part-time employee: A part-time employee works less than the standard full-time hours each week, usually 20 hours or less. They may or may not receive benefits, depending on their employer’s policies.
Temporary employee: A temporary employee is hired for a fixed period of time, usually to cover a short-term staffing need or a seasonal workload. They typically do not receive benefits and are not entitled to job security beyond the duration of their contract.
Contractor: A contractor is an independent worker who is hired to complete a specific project or task. They are usually paid by the hour or project and are not entitled to benefits or job security.
Freelancer: A freelancer is a self-employed worker who provides services to clients on a project basis. They work independently and are responsible for their own taxes and benefits.
Intern: An intern is a student or recent graduate who works for a company to gain experience in their field of study. They are often unpaid or receive a low stipend and are not considered regular employees.
Seasonal employee: A seasonal employee is hired to work during a particular time of the year, such as the holiday season or during the summer. They are typically part-time and do not receive benefits beyond their wages.
On-call employee: An on-call employee is available to work when needed but is not guaranteed a set number of hours each week. They may or may not receive benefits, depending on their employer’s policies.
Each of these employment status types has its own advantages and disadvantages, and it’s important for workers to understand the differences between them when seeking employment.
Why you should know about the different employment status types
Understanding the different employment status types is crucial for both employees and employers. For employees, knowing their employment status can help them understand their rights and benefits, such as overtime pay, sick leave, and healthcare coverage. It can also help them negotiate better terms of employment and plan for their future career path. Moreover, knowing the employment status types can help employees avoid being taken advantage of by unscrupulous employers who may try to classify them as independent contractors to avoid paying taxes and benefits.
Employers also need to understand the various employment status types to ensure they are complying with labor laws and regulations. Misclassifying employees as independent contractors or interns can lead to legal disputes and financial penalties. Additionally, understanding the different employment status types can help employers create a more flexible workforce by hiring part-time or temporary workers to fill in for short-term needs or reduce labor costs. Knowing the employment status types can also help employers attract and retain talent by offering competitive compensation and benefits packages.
Finally, understanding the employment status types is crucial for policymakers and labor activists who seek to improve the working conditions of employees. By knowing the employment status types, they can develop policies and campaigns that advocate for fair pay, benefits, and job security for workers. It can also help them identify areas where labor laws need to be strengthened or updated to reflect the changing nature of work in the modern economy. Ultimately, knowledge of the employment status types can lead to a more equitable and sustainable labor market that benefits both workers and employers.
Benefits on choosing our services for employment status types
If you are an employer who is struggling to identify the correct taxes and duties for different employment types, our accounting services can help. We have a team of experienced accountants who are well-versed in the tax and duty regulations for various employment status types. We can help you ensure compliance with labor laws and regulations while minimizing your tax liabilities.
Our accounting services can help you accurately calculate taxes and duties for full-time, part-time, temporary, and contract employees. We can also help you identify the tax and duty implications of hiring interns, freelancers, and seasonal workers. Our team stays up to date with the latest tax laws and regulations to provide you with accurate and timely advice.
In addition to identifying taxes and duties, our accounting services can also help you with payroll management, tax planning, and compliance reporting. We can assist you in setting up and maintaining payroll systems that are accurate and efficient, minimizing errors and penalties. We can also help you plan for taxes and duties, taking advantage of deductions and credits to minimize your tax burden. Finally, we can help you prepare and file compliance reports, ensuring that you meet all regulatory requirements.
Finally, our accounting services can provide you with the expertise and support you need to identify the tax and duty implications of different employment types. We can help you ensure compliance with labor laws and regulations while minimizing your tax liabilities. Contact us today to learn more about our accounting services and how we can help your business thrive.
Whatever your ambitions, we will commit to them wholeheartedly and deliver the premium accountancy services you deserve. Get in touch today to book a chat with our chartered accountants in Nottingham at Seagrave French.