Working in the United Kingdom
The United Kingdom has been a thriving tech sector for a long time, adding a gross value to the nation's economy with a CAGR of 7% in the last 5 years. With a 120% increased startup and scale-up ecosystem since 2017, it has been placed the UK at the top of the world's economy.
Working in the UK provides incredible opportunities to stay updated on the latest technologies, innovative science, and world-class engineering. However, UK follows stringent employment practices with strong regulations, and it is important to know one's employment status and their obligations under such status. To understand employees' rights or legal responsibilities, one has first to understand their employment status.
The Employment Law in the United Kingdom categorises employment status into 3 key components:
Employee, who is working under an employment contract and have full employment rights. According to the Advisory, Conciliation and Arbitration Service (ACAS)- the workplace expert for England, these Employment Rights include;
Self-employed individuals are independent contractors; they have no employment rights except protection for health and safety from discrimination and whistleblowing.
The Worker is an individual in between employment and self-employment status. The UK employment law defines a worker as a person working under an arrangement or contract (can be unwritten) for a reward that can be money or a benefit such as a future work promise. They have subcontract rights and minimal entitlements such as National Minimum Wage/National Living Wage, working time rights, limited protection. Furthermore, ACAS divides workers into subcategories: casual workers, agency workers, freelance workers, and zero-hours contract workers. Due to limitations of the scope of this blog post, we are not covering details. However, we will provide individual attention to the subcategories in our future blog posts.
Employment status is usually provided to employees in writing by their employers, and this status will ultimately determine individual rights and responsibilities.
Different Tax Definitions as per the Employment Status
Businesses are responsible for deducting income tax and National Insurance (NI) contributions from employees and workers as well as paying employers' NI. Individual may be taxed as an employee while not having full employment rights. This is because employment rights and tax reasons are not the same. Self-employed people are responsible for their own taxes and National Insurance.
The Chartered Institute of Personnel and Development (CIPD), the professional body for human resource management professionals in the UK, distinguishes between employee, self-employed and worker as “Employees work under a ‘contract of service’; the self-employed work under a ‘contract for services. Workers provide services personally to an organisation but under an arrangement that is looser than employment.”
Knowing your rights, while working in the UK, can help you navigate complex situations at work and also resolve disputes with your employer or co-workers in your favour.