Most workers know whether they are self-employed or employed, but with the steady increase in job flexibility and sub-contracting it is sometimes not so obvious. Many workers are told by their employer that they are self-employed when they are not, and an increasing number of jobs are advertised as self-employed. Some unscrupulous employers tell people that they are self-employed to avoid paying National Insurance and holiday pay. If your employer has told you that you are self-employed but, after reading this factsheet you believe that you an employee, please contact us for guidance on what to do.

Self-Employment

If you are self-employed you are considered to be working for yourself under what is known as a contract for services. You have the legal right to choose whether to do the work or not. You will probably be considered to be self-employed if:

• You are given little instruction on what to do and how to perform the work, or when or what hours you have to work.
• The financial risk of the job rests with you.
• You take the profit from a job. (However, you can profit from the way the job is done by receiving bonuses, tips or commission and still be considered an employee.)
• You price your own jobs or receive lump-sum payments.
• You are able to hire other workers. This means that you effectively become their employer and you will be responsible for their tax and National Insurance payments.
• You provide the main items of equipment to do the work, not just small tools or clothing.

Employment

Employed workers work for an employer under what is known as a contract of employment or contract of services. Employers have a legal duty to provide employees with a written statement of their main terms and conditions within two months of starting work. If an employer doesn’t do this, it doesn’t mean that there isn’t a contract or that workers are self-employed; see our factsheet Contracts of Employment for more information about this. You will probably be employed if:

• Someone tells you what to do or when and how to do it. This is an important factor which can often override others.
• You are paid by the hour, week or month.
• You get overtime pay.
• You work set hours or a given number of hours a week or month.

Rights at Work - employed workers

If you are an employee, you have many employment rights which include the right to a written statement of main terms and conditions, payslips, maternity leave, parental and dependent leave, protection against unfair dismissal (usually after one year’s service), redundancy pay after two years` service. This is not a full list, and it doesn’t apply to self-employed people.

There is another list of rights which are extended to workers rather than employees in the narrower sense of the term. These rights include the minimum wage, paid holidays, a restriction on the hours that they can work each week, and rest breaks.

Self employment

Genuinely self-employed people do not have any of the above rights. They may however be covered by anti-discrimination laws, by Health and Safety legislation, and by the law that protects wages. Further information about these issues can be obtained from the agencies listed below.

HM Revenue and Customs: These offices should be able to provide you with advice on tax and National Insurance questions respectively.  www.hmrc.gov.uk or telephone on 08453 000 627

Health and Safety Executive: The Health and Safety Executive can inspect workplaces and order employers to take specific steps if they find any working practices, equipment, machinery, or material unhealthy or unsafe. They can be contacted on 08453 45 00 55 or visit the website hse.gov.uk

Equality and Human Rights Commission

Discrimination law applies to self-employed people. Contact the Commission on 08456 046610 or visit the website www.equalityhumanrights.com.

Business Link: Business Link offers advice to small businesses and people wanting to start their own business. Business Link Northwest can be contacted on 0845 00 66 888 or see the website businesslinknw.co.uk

If you need more information about pay and employment rights, contact

Greater Manchester Pay and Employment Rights Advice Service

0161 839 3888 phone and answer machine

We give telephone advice only and cannot see people face to face

Or visit our website: www.gmemploymentrights.org.uk

Trade Unions

Trade Unions help workers to get better pay and work conditions

For further information contact us, or

North West TUC, Suite 506-510, The Cotton Exchange, Old Hall Street, Liverpool, L3 9UD

Tel: 0151 236 5432

Greater Manchester Pay and Employment Rights Advice Service is an independent research and information body funded by the Association of Greater Manchester Authorities

August 2010