Employment status

A number of different working arrangements have developed over the years, allowing more flexibility at work. There are three main types of employment status.

An individual's employment rights will depend upon whether they are an employee or worker (the self-employed have very few employment rights).

Key points

Employee

An employee will work to the terms within a contract of employment, and will carry out the work personally. A contract exists when terms such as pay, annual leave and working hours are agreed. Although the contract doesn't have to be written down to be valid it is best to record the main terms and conditions of employment in writing.

Employees are entitled to a wide range of employment rights, including all those to which a worker is entitled.

Examples of employee rights include:

Worker

A worker will also work to the terms within a contract of employment and generally have to  carry out the work personally. However some workers may have a limited right to send someone else to carry out the work, such as a sub-contractor.

Workers could include:

Workers are entitled to some employment rights including:

Self employed

A self-employed person will run their own business and take responsibility for the success of the business. Self-employed people are more likely to be contracted to provide a service for a client. They will not be paid through PAYE and don't have the same employment rights and responsibilities as employees or workers. However, a self-employed person:

Agency workers

An agency worker is supplied by a temporary work agency to a client/hirer to carry out work for the client/hirer. The work is normally for a temporary period.

The Agency Workers Regulations give agency workers the right to the same basic working and employment conditions they would receive if directly engaged by the client to do the same job.

Apprentices

School leavers can still leave school at 16 in England and Wales but must continue their education until they are 18 which could include becoming an apprentice. School leavers in Scotland can still leave school without going into further training.

Apprenticeships are work-based training programmes which lead to nationally recognised qualifications. Apprentices normally attend  local colleges or specialist training providers on a day release basis as part of their training. Depending on the level, apprenticeships can take between one to four years to complete.

Apprentices under 19, or 19 years and over in the first year of their apprenticeship, are entitled to be paid the apprentice national minimum wage. However, employers can pay a higher rate if they choose to. Once an apprentice reaches 19 years and has completed the first year of the apprenticeship the employer must pay the full national minimum wage rate.

All other apprentices are entitled to the national minimum wage based on their age.

Interns

Interns are graduates or students who spend a fixed amount of time working to gain skills and experience in a particular industry or sector. Students often have to do an internship as part of their further or higher education course.

An interns employment rights will depend on their employment status. If they are classed as a worker then they're normally entitled to the national minimum wage. However, if the internship is part of a UK-based further or higher education course (a sandwich course) lasting less than a year then interns are not normally entitled to the National Minimum Wage.

Internships should not be confused with work experience which involves a person spending a limited period with an employer to learn about working life and the working environment.

Volunteers

Volunteers carry out unpaid work for organisations such charities, voluntary organisations or fundraising bodies. Volunteers usually have a volunteering agreement and a role description rather than a contract of employment and a job description. They should receive training and development appropriate to their role.

Volunteers are not entitled to the national minimum wage as they are not paid for their services, but they are often paid their travel and lunch expenses.

Umbrella companies

An umbrella company is a company that will act as an employer to agency contractors who work under a fixed term contract assignment. The umbrella company will normally sign a business-to-business contract with the recruitment agency, and the agency will sign a contract with the client. The agency will invoice the client for completed work, the client pays the agency, and the agency then pays the umbrella company. This money becomes the Umbrella company's income. The umbrella company deducts the necessary tax and NI contributions, including employers NI, and any other deduction necessary, which means the payment will be made through PAYE.

This topic is addressed in Acas Employment Law Update training. View course listings. You may also benefit from viewing our Employment Law Update timetable.