The following Employment Q&A provides comprehensive and up to date legal information covering:
This response considers employee status from an employment law perspective, rather than from a tax or commercial perspective.
When an employer wishes to engage or employ an individual, it is important for the employer to determine at an early stage what status it considers that individual should have, whether of an employee, an employee shareholder, a worker, an agency worker, an intern, a volunteer or as a genuinely self-employed person. This is important because:
the rights which attach to each of them are different, and
it will also be relevant to the individual’s treatment for tax purposes
It should be remembered that, whatever status is chosen, the courts and tribunals will look to the reality of the arrangement, in preference to what the contract states, in order to determine the status of an individual.
A consultant who is genuinely self-employed will not have the status of employee or worker and, depending on the circumstances, may not be willing or available to become an employee. However, consultancy arrangements will sometimes create an employee or worker relationship unintentionally.
For further information, see: Status and worker categories—overview and Practice Note: Deciding appropriate employment status.
For information on the tax issues generally, see Practice Note: Employment status—why it matters.
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