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Do You Know The Employment Status Of Your Workers?

Are you sure they're not self-employed?

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Employment status can be a bit tricky to determine sometimes, especially when we now have the gig economy. Are the people who work for your business self-employed or actual employees? How can you be sure?

Ensure you know the proper employment status of everyone who works for you!

Ensure you know the proper employment status of everyone who works for you!

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If you want to determine an individual's status, you need to carry out an employment status test for each of them. This will give you peace of mind about which of the three categories of employment they fall into.

"Employee, worker or self-employed?"

Each category determines which employment rights an individual is entitled to such as annual leave and statutory sick pay as well as your obligations regarding tax deductions and national insurance payments.

Rather than just relying on existing contracts, you should always dig a little deeper until you are entirely sure of the individual's employment status. A tribunal will do the same if there was a dispute, so why wouldn't you?

There are three aspects to determining an individual's employment status:

  • Control

    What's the balance of power between you and the individual? Do you set the hours and location of work? Is there a dress code they should adhere to?

  • Mutuality Of Obligation

    Do they take direction from a manager in your business or are they free to work on projects from other businesses?

  • Personal Service

    Does the individual have to do the work themselves or can they send someone else to do it in their place?

Getting this assessment wrong can cause problems further down the line, which businesses such as Addison Lee and Pimlico Plumbers have found to their detriment.

The more rules that are in place between your business and an individual, then the more likely that they will be classed as an employee or worker. You must understand the employment status of everyone who works for you or you could be open to costly tribunal proceedings.

"Would you like to know more?"

If you'd unsure of the employment status of those who work for you, then do give me a call on 01908 774320 or click here to ping me an email and let's see how I can help you.

Until next time ...

Business Godparent

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More about Roger Eddowes ...

Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.

Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.