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Published 12 September 2022
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What is an Employee?

Knowing the people in your business is important. And that includes knowing their employment status. We look at who counts as an employee and consider the legal rights that come with that status.

There are three main employment statuses in the UK:

  • Employee
  • Worker
  • Self-employed

The rules and rights surrounding employment status are broadly similar across the UK, though there may be some differences in Northern Ireland.

Below, we look at the difference between a worker and an employee, including the rights to which they are each entitled.

What is an employee?

Legally speaking, an employee is someone that works for your business under an employment contract. They have an obligation to regularly complete work, have a minimum number of working hours and will be paid for their time.

It’s likely someone working for your business legally counts as an ‘employee’ if they:

  • have a regular work pattern with a minimum number of hours
  • get paid for their time
  • report to a manager who is in charge of their work
  • cannot get someone to do their work for them
  • get paid holiday leave, sick pay and maternity or paternity pay
  • can enrol in the company pension scheme
  • are bound by company policies, procedures and rules
  • do their work using tools provided by the business
  • have a contract that uses the words ‘employer’ and ‘employee’

If you employ someone that doesn’t meet all these criteria it’s likely that, in the eyes of the law, they are a ‘worker’ instead.

If you work for yourself, it’s likely that you’re self-employed instead.

» MORE: Going self-employed: What to know

For the purposes of employers’ liability insurance, an employee is simply anyone that works for you under a ‘contract of service or apprenticeship’. They don’t have to meet all the above criteria to count as an employee.

As soon as you employ anyone in the UK, you must get an employers’ liability insurance policy worth at least £5 million. This may not apply if you are a business who only employs family members – though this exemption won’t apply if your business is incorporated, i.e. a limited company.

Read on below for more details on the difference between workers’ and employees’ rights in the workplace.

» MORE: Cost of hiring someone in the UK

Employee rights

Employees have all the rights that workers have, with some additional protections and allowances, such as:

  • Statutory Leave: maternity, paternity, adoption or shared parental leave (workers are only entitled to pay, not leave)
  • Minimum notice periods if you’re fired or made redundant
  • Statutory Redundancy Pay
  • Protection against unfair dismissal
  • The right to time off for emergencies – events involving a dependant, such as a partner or child
  • The right to request flexible working, such as remote working or sharing your job with another person

You may have to have worked for an employer for a set amount of time before you are entitled to employee rights. Check your employment contract or ask your employer if you’re unsure.

Employee tax status

In the eyes of HM Revenue and Customs (HMRC), you are an employee if you work under a ‘contract of service’, a ‘contract of apprenticeship’ or for the Crown. This means that your employer must deduct your tax from your pay before you receive it through the Pay As You Earn (PAYE) system.

Someone can be an employee for tax purposes but a worker when it comes to employment rights.

For example, if you employ someone to do clerical work on an ‘ad-hoc’ basis, it’s likely they’re legally a ‘worker’ as there is no guarantee of work. But you would still pay them as an employee through PAYE.

If you run a business, it’s your responsibility to check whether the people who work for you are employees in terms of both tax and legal rights.

HMRC provides an online tool you may find useful to figure out if the people who work for you are classed as employed or self-employed from a tax perspective.

If you’re unsure about the employment or tax status of the people who work for you, you may consider consulting a lawyer or tax adviser for more information.

What is a worker?

Legally, there is a difference between a ‘worker’ and an ‘employee’. Usually, workers:

  • complete work or services for money or a benefit in kind
  • are paid through the PAYE system
  • have some degree of choice to subcontract their work – but only in certain cases
  • do not have to accept work they are offered

If you employ anyone on a casual or ‘zero hours’ contract, they may legally be classed as a ‘worker’ rather than an ‘employee’. Agency workers may also be classed as workers.

Workers have a smaller set of rights compared to employees. As a worker, you are still entitled to statutory requirements, such as paid holiday and rest breaks. However, you may not receive additional benefits such as Statutory Sick Pay, maternity, paternity or adoption leave.

Differences between a worker’s rights and an employee’s rights

The table below summarises some of the differences between a worker’s rights and an employee’s rights.

Written terms of employmentYesYes
Access to payslipsYesYes
Paid at least National Minimum WageYesYes
Protection against unlawful deductions from payYesYes
Statutory paid holiday allowanceYesYes
Rest breaks YesYes
Working on average no more than 48 hours a week (unless you choose to opt out of the limit)YesYes
Protection against unlawful discrimination at workYes Yes
Whistleblower protectionYesYes
Equal treatment whether working part-time or full-timeYesYes
A minimum notice period if employment endsNoYes
Requests for flexible workingNoYes
Time off for emergencies NoYes
Protection against unfair dismissalNoYes
Statutory Redundancy PayNo Yes

You can find out more information about worker and employee rights, such as holiday entitlement and statutory leave requirements, on for Great Britain or nidirect for Northern Ireland.

You can also contact the Advisory, Conciliation and Arbitration Service (Acas) in England, Scotland and Wales or the Labour Relations Agency (LRA) in Northern Ireland.

» MORE: Are work perks worth it for employees?

Image source: Getty Images

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