A self-employed person will run their own business and take responsibility for the success of the business. Self-employed people are more likely to be contracted to provide a service for a client. They will not be paid through PAYE and don’t have the same employment rights and responsibilities as employees or workers. However, a self-employed person:
There are a number of employee/employer relationships which are now different from the traditional 9-5 job. A person’s employment status will determine their rights and their employer’s responsibilities.
A genuinely self-employed person will have few employment rights, their rights are governed by the terms and contract that they enter into with the party who engages them.
- Self-employed people are in business for themselves, providing a service to clients with more control over how, when and by whom the service will be delivered.
- Self-employed people will account for their own tax and National Insurance payments.
- People can be both employed and self-employed at the same time, for example, they can work for an employer during the day and run a business on evenings and weekends.
- A contractor could be self-employed, a worker or an employee depending on whether they work for a client and are employed by an agency.
Although a self-employed person will not have the same employment rights and responsibilities as employees or workers, a self-employed person:
- still has protection for their health and safety on a client’s premises
- in some cases will be protected against discrimination
- will have their rights and responsibilities set out in the terms of the contract with their client
- in general, will not have the right to holiday pay
- may in limited cases be self-employed for tax purposes but classed as a worker or an employee for employment rights.
Legal decisions on employment status
Only a court or employment tribunal can make a final decision on someone’s employment status. Someone can still be classed as an ’employee’ or ‘worker’ even when they are taxed on a self-employed basis. The court or tribunal will look at the employment relationship between the person and business.
Self-employed or contractor
A self-employed person will run their own business and take responsibility for the success of the business and are more likely to provide a service for a client.
A person may be classed as self-employed or a contractor if:
- they bid or provide quotes to secure work
- they decide when and how to do work
- they are responsible for their own tax and National Insurance
- they do not receive holiday or sick pay when unavailable for work
- they provide the main tools, equipment or materials that are needed to complete a job.
Contractors can be self-employed, a worker, or employee if they work for a client and are employed by an agency. There is a special scheme for self-employed contractor and sub-contractors in the construction industry. Under this, the Construction Industry Scheme contractors deduct money from a subcontract as advance payments towards their tax and National Insurance. This scheme covers most construction work to buildings, including site preparation, decorating and refurbishment.