Ascertaining employment status: why is it important for rights?

11th October 2022

Ascertaining someone’s employment status is crucial because this determines what employment rights they have and what taxes they have to pay.

In relation to employment rights, there is a three-tiered status framework:

  • An employee – who has the most rights and responsibilities.
  • A worker (sometimes referred to as ‘limb (b) workers) – who has fewer rights and obligations.
  • A self-employed person – who has the least protection but with fewer personal obligations.

For taxation purposes, there are only two statuses: an employee and a self-employed person.

The Government has published its long-awaited response to the employment status consultation exercise from February 2018. It concluded that while long-term reform could help bring clarity, in the short-term, it might create cost and uncertainty for businesses that are focusing on recovering from the pandemic. Consequently, the Government has decided against legislative reform.

In an article first published in the Reward Strategy digital magazine issue 237, Blake Morgan, Senior Practice Support Lawyer, Debra Gers considers the Government response and the new guidance that has been published to improve clarity around employment status.

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