Understanding Single Worker Status: A Guide for Employers and Workers

Introduction to Employment Status

Understanding employment status is essential for both employers and workers. It determines the legal rights and obligations under employment legislation.¹ Knowing whether someone is an employee, worker, or self-employed affects their employment rights, pay and protections.

The Labour Government has proposed introducing a single worker status. This aims to simplify employment law by creating a clear legal definition that covers all types of workers. The goal is to provide stronger employment rights and better protection for everyone, including self-employed contractors and those in the gig economy.²

Currently, employment status can be confusing. Different categories come with different rights and responsibilities, for example, an employee has more protections than a self-employed person. To avoid misunderstandings, it is wise to seek legal advice. This helps both employers and workers understand their status and related rights.

Employment law is always changing. These changes aim to protect workers and create a secure working environment for all.

Characteristics of Self-Employed Contractors

Self-employed contractors, also called independent contractors, run their own business. They provide services to clients but are not employees. As their own boss, they have more control over how they work.

Some key points about self-employed contractors:³

• They must pay tax and national insurance themselves.
• They do not get statutory sick pay, holiday pay or other employment rights.
• They may need to register with HM Revenue for tax purposes.
• They may face legal challenges around their self-employed status and contracts.

Because of these complexities, self-employed contractors often need specialist advice to understand their rights and responsibilities.

Self-Employment and Rights

Self-employed people have fewer statutory rights than employees or workers. However, they still have some protections, such as discrimination protection.³

Key facts about self-employment and rights:³

• They are responsible for their own health and safety.
• They must have adequate insurance.
• They usually provide their own equipment and services.
• They may, or may not, be entitled to paid holidays or other benefits.
• Understanding their employment status is vital to navigate employment law.

Knowing these points helps self-employed people manage their work and legal responsibilities better.

Employment Rights and Health and Safety

All workers, regardless of status, have some employment rights and health and safety protections.

Employers must:

• Provide a secure working environment.
• Offer proper health and safety training.
• Take seriously any health and safety concerns raised by workers.

Workers have the right to:

• Report unsafe conditions.
• Protection from unfair dismissal and discrimination.
• Other legal protections under employment legislation.

Understanding these rights helps create safer workplaces and better relationships between employers and workers.

Worker Status and National Minimum Wage

Worker status is important because it affects pay and benefits. Workers, including those in the gig economy, have rights to the national minimum wage, statutory sick pay and holiday pay.⁴

Employers must:

• Pay the correct national minimum wage.
• Provide sick pay and holiday pay where required.
• Understand the complex rules around worker status.

Because this area can be complex, employers should seek legal advice to ensure they meet their obligations.

Tax Implications for Self-Employed Individuals

For self-employed workers, tax is a key responsibility with several responsibilities set by HM Revenue and Customs.

They must:⁵

• Register with HM Revenue for tax purposes.
• File annual tax returns.
• Pay their own tax and national insurance.
• Keep accurate records to claim allowable deductions for business expenses.⁶

Unlike those on zero hours contracts or sub-contractors working under different arrangements, self-employed workers must manage their own tax affairs. While they do not employ staff in the traditional sense, they still have certain rights and many benefits related to their tax status. However, they should be aware of their responsibilities set by tax authorities to avoid penalties.⁷

Tax rules can be complex, so many self-employed people benefit from professional advice to stay compliant and ensure they receive other protections available to them. This can include protection against unfair treatment in tax matters.

Determining if Someone is Genuinely Self-Employed

It can be difficult to decide if a person is genuinely self-employed or should be classed as an employee.

Important factors include:

• Level of control over work.
• Whether the person must provide personal service.
• The presence of mutuality of obligation (whether the employer must offer work and the worker must accept it).
• The nature of the working relationship.

In some cases, individuals may employ staff themselves, or have other business arrangements, which can influence their status. Understanding these distinctions is crucial because genuine self-employed workers have certain rights and other protections that differ from employees, including protection against unfair dismissal or treatment.

If there is doubt, an employment tribunal may decide the correct employee status. This is sometimes called the single test for employment status.

Contracts and Agreements for Workers

Having clear contracts and agreements is vital for all workers, especially self-employed contractors.

Key points about contracts:⁸

• A written contract clarifies terms, including pay, holiday entitlement, and notice periods.
• Contracts help define employment status and legal rights.
• Payroll systems must reflect contract terms and legal changes.
• Workers may wish to seek legal advice before signing contracts.

Clear contracts reduce misunderstandings and protect both parties.

Resolving Disputes Related to Employment Law

Disputes over employment law can arise between employers and workers.

To resolve disputes:⁹

• Many cases go to an employment tribunal.
• Some disputes may be heard in county court.
• Issues like unfair dismissal require legal knowledge.
• Both parties should seek legal advice to understand their rights and options.

Proper dispute resolution helps maintain fair workplaces and protects everyone’s interests.

Conclusion and Next Steps for Employers and Workers

Understanding single worker status and employment law is crucial for both employers and workers. The Labour Government’s plan for a single status aims to simplify the law and offer stronger employment rights and protection for all.

To prepare:

• Stay informed about changes in employment legislation.
• Employers should invest in training and update payroll systems.
• Both employers and workers must understand their rights and obligations.
• Creating a secure working environment benefits everyone, leading to higher employee satisfaction and reduced turnover.

By taking these steps, businesses and workers can build fairer, safer and more productive working relationships.

Sources

1. acas.org.uk/employment-status
2. payrollcomplianceauthority.co.uk/what-does-single-worker-status-mean-for-contractors
3. howellslegal.co.uk/the-quick-guide-to-self-employed-workers-rights
4. london.gov.uk/employment-rights-hub/rights-gig-economy-workers
5. litrg.org.uk/self-employment-registering-tax-and-nic
6. gov.uk/self-employed-records/what-records-to-keep
7. pie.tax/tax-pible/tax-evasion-penalties-self-employed
8. https://employeemanagement.co.uk/what-should-an-employment-contract-include-in-2025/  
9. rcn.org.uk/employment-tribunals-and-the-courts