Employee or Self Employed

Key Points

  • Some rights (such as the right to claim unfair dismissal or a statutory redundancy payment) are restricted to employees whilst other rights (such as whistleblowing protection under ERA 1996 s.43A et seq) are given to both employees and other workers. Exactly who qualifies as a worker varies from one statute to another.
  • Whether a person is an "employee" is also important for other purposes, such as income tax and social security and because of the vicarious liability of employers to third parties for wrongful acts of their employees .
  • It is usually obvious whether a particular contract is a contract of employment(ie a contract of service between an employer and an employee) or a contract for services (ie made by an employer with an independent contractor/self-employed person). A simple and straightforward example of the difference is the contrast between the jobs of chauffeur and taxi-driver referred to in Stephenson Jordan & Harrison Ltd v Macdonald and Evans [1952] 1 TLR 101 and [1952] 69 RPC 10). However, grey areas arise and it is not always clear whether a person is or is not technically an employee.
  • The basic criteria for deciding whether someone is an employee or not are set out in the leading case of Ready Mixed Concrete (South East) Ltd v Minister of Pensions and NI [1968] 1 All ER 433.
  • Even if the criteria are satisfied, it is still possible that the worker concerned is not an employee for employment law purposes. Other factors must be considered. The traditional basic tests of "control" and "mutuality of obligation" remain fundamentally important (see Montgomery v Johnson Underwood Ltd 2001 EWCA Civ 318, [2001] ICR 819, CA, Carmichael & anor v National Power plc (HL) 1999 ICR 1226, House of Lords, Express & Echo Publications Ltd v Tanton CA 1999 ICR 693, CA, Stevedoring & Haulage Services Ltd v Fuller CA 2001 IRLR 627 and Bridges & ors v Industrial Rubber plc, EAT on 21st September 2004 - the case of the "Gosport Nine" homeworkers).
  • A professional person may or may not be an employee (eg an in-house company lawyer will normally be an employee but of course hiring an outside firm of solicitors does not make them employees of the client). 

 

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