Companies often engage people to carry out work in a number of different ways, depending on the nature of the work involved and the type of relationship that they want to have. However, it is crucial that companies ensure they are putting the right contracts in place with each person. Different employment rights apply depending on the status of the individual and every year hundreds of employers get this wrong, leading to claims or settlement agreements that they were not anticipating.

Here we set out a quick guide to employment status:

Employees

• Employees have a large number of protections under employment law including protection against unfair dismissal if they have two or more years’ service.
• The employee must undertake the work offered and the employer must pay the employee for being available for work.
• Suitable where you need or want to have control over the way the work is performed and it is crucial that it is this person who performs the work.
• You will provide any equipment needed by the employee.
• The employee will be entitled to employee benefits such as holiday and sick pay.
• Contracts can be on a permanent or fixed-term basis.

Freelancers

• Suitable where there is ad-hoc or short-term work.
• There is no on-going commitment to provide work and the individual does not have to accept work when it is offered.
• Individual can provide a substitute if they are unwell/unavailable.
• Individual provides their own equipment.
• You don’t need to have control over the way the work is performed.
• Freelancers will accrue statutory holiday entitlement depending on the hours/days worked.
• The freelancer should not have access to employee benefits.

Self-employed contractors

• Suitable where the contractor is genuinely in business on their own account.
• You may contract directly with the individual or with a personal service company through which the contractor will be provided.
• Contractor can provide a substitute if they are unwell/unavailable.
• The contractor provides their own equipment.
• You don’t need to have control over the way the work is performed.
• The contractor should not have access to employee benefits.
• The contractor will not accrue holiday entitlement.

If you are in any doubt as to which arrangement to use, or if you think you have an individual currently on the wrong contract, get in touch today.

Call 0333 006 2929 or email [email protected] today to discover exactly how we can help you.