The Supreme Court has ruled that Uber drivers are workers and must therefore receive the minimum wage and holiday pay just like employees. So what is the difference between a worker and an employee?
Each of these terms has a different status of employment and each have different rights which a business owner or employer should be aware of.
How do you distinguish between each employment status?
A person is classed as a worker if any of the following apply:
- An arrangement (or verbal or written contract) is made for the worker to provide services for a reward (monetary, a benefit or a promise of future work)
- The employer has to provide work for them for the length of the contract or agreement
- The worker has to turn up for a work even if they don't want to and cannot replace themselves with another worker
- The work is classed as casual, freelance, zero hours or irregular and does not have to be offered by the employer nor accepted by the employee
- The business provides equipment and materials to do the job
- They are under the supervision of a manager
- Tax and National Insurance is deducted from their pay and they are provided with a payslip
A person is an employee if any of the following apply:
- They have an employment contract
- They are provided with work for a set number of hours and are expected to do that work themselves
- A manager is responsible for the work the employee does
- They are provided with equipment and materials to do their job
- They are not able to replace themselves with someone else
- Deductions are made from their pay for tax and National Insurance
- They are entitled to join the company pension scheme
- They are entitled to take paid holiday
- They are entitled to statutory payments such as sick pay, maternity pay, paternity pay, etc
These two statuses appear very similar but each has different rights.
What rights do Workers and Employees have and how do they differ?
Workers
- Are not entitled to a notice period nor statutory redundancy pay
- Are not entitled to protection against unfair dismissal
- Do not have the right to request flexible working
- Are not entitled to time off for emergencies
- Must receive the minimum wage
- Must receive statutory paid holiday
- Must have statutory minimum rest breaks and must not work more than 48 hours per week unless they choose to opt out
- They may be entitled to statutory payments
- Are not entitled to maternity or paternity leave
Employees
In addition to the rights of workers employees are entitled to the following:
- All statutory payments including redundancy pay
- A minimum notice period
- Protection against unfair dismissal
- The right to request flexible working
- Time off for an emergency relating to a dependant
It is important to be aware that some rights require a minimum length of continuous employment.
The status of your worker or employee can be complex and it is important to get it right because you and the person you employ could be liable for tax and penalties if the employment status is incorrect.
Self-employed
People who are self-employed do not fall into either of these categories. A person cannot choose to be self-employed when they work for a company on a regular basis. A person is self-employed if they run their own business, have customers and take responsibility for its success or failure. They are responsible for registering with HMRC and paying their own tax and National Insurance.
Check the employment status of your employee or worker
You can check the status of your worker or employee on HMRC's website using the employment status check.