What is your Employment Status?

Those who work on a self-employed basis have significantly less protection than employees in the workplace. There is a growing trend within certain sectors to work on a freelance or self-employed basis and there are tax benefits in so doing.  The benefits, however, must be weighed against the loss of employment rights.

A number of cases reaching employment tribunals are concerned with employment status; being classified as self-employed is effectively waiving your right to claim for unfair dismissal or to be paid sick pay; holiday pay; maternity pay or redundancy pay.   A number of unscrupulous companies are encouraging their staff to become self-employed as a means of removing employment rights.  There is more to being self-employed, however, than signing a contract and being paid differently.

When considering employment status, the courts will look at the true agreement between the parties.  In Autoclenz v Belcher & Ors [2011] UKSC 41[1] The Court of Appeal found that the focus must be to discover the actual legal obligations of the parties.  Tribunal will examine all the relevant evidence, including any written term itself, which will be read in the context of the whole agreement, as well as evidence of how the parties conducted themselves in practice and what their expectations of each other were.

Employment Status is a complex issue and deciding whether a worker is self-employed or employed will have huge relevance to the rights that they enjoy.

Although tax law differs from employment law, the Inland Revenue provide a useful online test for  employment status.

Employment status for the purposes of employment law is a complex area and consideration will usually be given by tribunals to four areas.


  • Do you have a say about what work you do and the tasks you undertake?
  • Can you choose whether to do the work yourself or appoint someone else to do it for you?
  • Can you choose when and how you work?


  • Do you take part in staff meetings and training?
  • Are you exempt from having action taken against you using the company disciplinary procedure?
  • Are you part of the company benefits or pension scheme?

Mutuality of Obligations

  • Does your employer offer you work when it is available or do you attend work every day?
  • Can you decide when you work and can you turn down work when it is offered?

Economic Reality

  • Do you bear any financial risk with your work?
  • Can you do anything to increase the profits that you make and minimise the losses?
  • Do you have to correct unsatisfactory work at your own expense?
  • Do you submit invoices to the company that you do work for?
  • Do you get a fixed payment for each job that you do?
  • Do you provide the main items of equipment needed to do the job?
  • Do you work for other employers or undertake assignments for different companies?

If it appears that, notwithstanding how you are paid or treated for tax purposes, if you are still effectively an employee then you will be able to benefit from a number of employment rights.