Employment Status
Are your team members truly self employed, or just ‘self employed’ on paper? The distinction matters. HMRC and Employment Tribunals look beyond the contract to the day-to day reality of how you work. Use this guide to understand exactly where you stand and consider a Employment Status Check UK by NewmanHR.
The Reality Check
Contract vs. Reality
You might agree with your staff that they are “Self Employed.” You might even sign a contract to that effect.
HMRC may disagree. If a tribunal decides they are actually employees based on how they work, the contract is irrelevant and you could be liable for backdated Tax, NIC, and benefits.
The Basics
What is my status?
Employed
You personally work under the control of someone else. You do not run the risks of having a business yourself. You enjoy employment protection and benefits.
Self Employed
You are in business on your own account. You bear the responsibility for the success or failure of that business and take responsibility for your own actions.
The Determination Tests
The "Whole Picture" Test
There is no single question that decides it. You must look at the job as a whole. If you answer “Yes” to the questions below, it indicates your likely status.
Likely Employee
- Do you have to do the work yourself? (No substitution)
- Can someone tell you how, when, and where to work?
- Do you work a set amount of hours?
- Can someone move you from task to task?
- Are you paid by the hour, week, or month?
- Can you get overtime or bonus pay?
Likely Self Employed
- Can you hire someone to do the work for you?
- Do you risk your own money?
- Do you provide your own main equipment?
- Do you agree a fixed price? for the job?
- Do you work for multiple clients regularly? ✓
- Do you fix unsatisfactory work at your own expense?
Complex Scenarios
The Grey Areas
Just because you are self employed in one job doesn’t mean you are in another.
Casual Work
Even for part time or casual work, unless you pass the “Self Employed” tests above, you are normally an employee.
Hybrid Status
You can be an employee by day (e.g., Factory Worker) and self employed by night (e.g., Running a side business).
Multi-Jobbing
Working for many people suggests self employment, but you must apply the tests to each specific engagement.
Get Certainty
Need a Definitive Answer?
We provide advice on a one-off or retainer basis. Our clients are typically within a 1 hour drive of the M25 North East sector, though we advise businesses across England.
Recommended Further Information
We help businesses across Finchley, London, and the Home Counties determine correct employment status to satisfy HMRC and avoid tribunal risks.