How can I work out if someone is employed or unemployed?

There is no legal definition of what constitutes an employee (who works under a “contract of service”) and a self-employed worker (engaged under a “contract for services”).

Many businesses are ‘caught out’ by HMRC, as they are clear of the differences between how employed and self-employed workers should be managed.

As a guideline, if you answer ‘yes’ to all of the following, then it is likely that, at present, your workers are employees:

  • Do you manage your workers day-to-day, including moving them from one task to another, and do you check and supervise their work while in progress?
  • Do your workers carry out all of the work in person, or do they have to ask your permission if they wish to get someone else to do some or all of the work?
  • Do you try to find new or additional work for your workers, or do you pay them when no work is available?
  • Would you have to give them a period of notice (however small) if you didn’t want to use them anymore?

Employment status is a complex area of tax and employment law. There are many other points to consider such as:

  • case law
  • employment tribunal rulings
  • tax tribunal and special commissioners hearings

Do you still have questions? Get in touch with our employer services team to find out more about how they can help you.

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