Do you have workers or employees?
So how is September treating you? For me, September is like a new year.
You see I live in a term-time home, three little Scullions are in primary school and hubby works in education so our house is ruled by the academic calendar! Which has good points and bad points. Without doubt the best thing for me is structure and routine, I thrive on routine and am a firm believer that everything has a place and everything in its place. So with my family back in the routine and structure that school runs, uniforms, packed lunches and homework brings it made me think about structures and routines for my lovely clients. Starting at the beginning – I wanted to check that you understand what staff structure you are following and that starts with understanding whether the people in your business are: workers; employees; self employed or a mixture.
Why do you need to know if you have workers or employees?
Did you know that there are different categories of staff when considered under the context of employment legislation in the UK? Whilst on the surface these categories may seem interchangeable to many employers, it is essential that you understand which categories you employ.
Surely as the business owner you can decide what category the people you pay fall under? Actually you don’t get so much of a say in this, as the legislation is very clear on this topic. Believe me, I have had clients try to argue that someone is a self-employed subcontractor as that is what both parties want, however as their HR Professional it is my job to apply the relevant tests to understand which category the person will fall under in the eyes of the employment legislation.
Each different category determines the individual’s employment status and therefore their entitlement to different rights and protections under the employment legislation. It is my job to help you understand what categories your people fall under. As the employer, you have a duty to honour their rights.
Below you will find the three main categories of staff: Worker, Employee and Self Employed.
- A worker is any individual who works for an employer, whether under a contract of employment, or any other contract where an individual undertakes to personally do any work or services.
- The following groups of people are likely to be workers but not employees: most agency workers; short term casual workers; and some freelancers.
A person is generally classed as a ‘worker’ if:
- they have a contract or other arrangement to do work or services personally for a reward (your contract doesn’t have to be written)
- their reward is for money or a benefit in kind, eg the promise of a contract or future work
- they only have a limited right to send someone else to do the work (subcontract)
- they have to turn up for work even if they don’t want to
- their employer has to have work for them to do as long as the contract or arrangement lasts
- they aren’t doing the work as part of their own limited company in an arrangement where the ‘employer’ is actually a customer or client.
- An employee is someone who works under an employment contract.
- An employment contract need not be in writing – it exists when you and your employer agree terms and conditions of employment.
- A person may be an employee in employment law but have a different status for tax purposes. Employers must work out each worker’s status in both employment law and tax law.
SELF-EMPLOYED / CONTRACTOR
- A person is self-employed if they run their business for themselves and take responsibility for its success or failure.
- Self-employed workers aren’t paid through PAYE, and they don’t have the employment rights and responsibilities of employees.
- Someone can be both employed and self-employed at the same time, eg if they work for an employer during the day and run their own business in the evenings.
Accredited category sources: www.gov.uk and www.nidirect.gov.uk
Now that I have gotten that very boring topic off my chest, I have a challenge for you my lovely reader.
As a business owner, using the information above go through all the people you pay in your business and make sure you know who the workers are, who the employees are and who the self-employed are. Once you understand that you can then make sure you are honouring your employer duties appropriately.
Until next time
Founder of the HR Doc Shop™
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