Employed or self-employed?

Readers may be aware from various news reports in recent years, that here have been several cases taken relating to an individual’s employment status. Typically, the company or organisation asserts that the individual is self-employed and the individual is arguing that they are in fact an employee or worker.

There are certain distinctions between “employees” and “workers” but this is not the focus of this article. Rather, this article concentrates on whether someone is self-employed (with no employment rights) or a worker or employee (with some or all employment rights). Workers and employees have the right to the minimum wage and paid holiday, whereas the self-employed do not. These are the rights that the individuals taking the cases that have been in the news tend to be arguing for. 

The case law is clear that the stated intentions of the parties in any written agreement is only one factor to be considered. An arrangement that is not genuinely self-employed cannot be made into a self-employed arrangement simply because a written agreement says so or because the organisation requires the individual to invoice for their time and tells them that they are responsible for their own tax.


So  what are some of the factors to weigh up in determining the correct employment status? 

Personal service

Is the individual free to send a substitute to carry out the work? If so, they are likely to be self-employed. If however they are required to perform the work personally and cannot send a substitute, this is more consistent with the individual being an employee or worker.


The greater the degree of control exercised by the organisation over the activities of the worker, the greater the likelihood that the arrangement is one of employer and employee. If the person is free to decide how and when to provide the service, this is more consistent with self-employment. Of course some degree of control is always exercised by the client of a self-employed person in relation to how the work is carried out and what the end product or service should look like and, as there is no definitive tipping point where sufficient control is exercised for the arrangement to be not genuinely self-employed, that it is always important to look at other factors, such as…

Equipment and insurance

A self-employed person would generally be expected to provide the means to carry out the tasks they have been engaged to carry out, including any tools and administrative support. A self-employed person would also normally be expected to carry their own insurance.

On the other hand, an employee is likely to have the equipment to carry out the work provided by the organisation and be covered by the organisation’s insurance. 


The “integration” test considers the extent to which the individual is a part of the organisation. Are they fully integrated into the organisation and considered a part of the team or do they simply provide a service to the organisation? Are they included in staff meetings and staff social events? Would an outsider consider them to work for the organisation?  

The more integrated a person is into an organisation, the more likely it is that they are an employee. If the person more clearly is providing a service ancillary to the organisation and is not considered part of the staff team, they are more likely to be self-employed. 

No single factor is likely to be conclusive by itself. What is required is a weighing up of the aspects of the arrangement that look typical of self-employment against those aspects that look typical of employment and a decision made on balance, having considered all relevant factors.

Attaching the correct status to the arrangements on which people are engaged is hugely important for a number of reasons and getting it wrong can have major implications in relation to tax and employment rights. If you engage individuals in your organisation on anything other than an employed basis and would like us to take a look at your arrangement to make sure that you are attaching the correct employment status to the arrangement, please do not hesitate to get in touch.


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