Employment status

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Employee

An employee is someone who works under an employment contract.

A person may be an employee in employment law but have a different status for tax purposes. Employers must work out each worker’s status in both employment law and tax law.

If someone is classed as an employee for tax purposes, their employer must tell HM Revenue and Customs (HMRC) when the person starts being an employee or stops being an employee.

Employment rights

All employees are workers, but an employee has extra employment rights and responsibilities that do not apply to workers who are not employees. For example, workers are entitled to most types of statutory pay, but only employees get statutory pay and leave.

Employment rights include all of the rights workers have and:

Some of these rights require a minimum length of continuous employment before an employee qualifies for them. An employment contract may state how long this qualification period is.

Working out employment status for an employee

Someone who works for a business is probably an employee if most of the following are true:

  • they’re required to work regularly unless they’re on leave, for example they’re on holiday or on sick leave or on maternity leave
  • they’re required to do a minimum number of hours and expect to be paid for time worked
  • a manager or supervisor is responsible for their workload, saying when a piece of work should be finished and how it should be done
  • they cannot send someone else to do their work
  • they get paid holiday
  • they’re entitled to contractual or Statutory Sick Pay and to maternity pay or to paternity pay
  • they can join the business’s pension scheme
  • the business’s disciplinary and grievance procedures apply to them
  • they work at the business’s premises or at an address specified by the business
  • their contract sets out redundancy procedures
  • the business provides the materials, tools and equipment for their work
  • they only work for the business or if they do have another job, it’s completely different from their work for the business
  • their contract, statement of terms and conditions or offer letter (which can be described as an ‘employment contract’) uses terms like ‘employer’ and ‘employee’

If most of these do not apply, you should work out if the person is self-employed.

Individuals and their employers may have to pay unpaid tax and penalties, or lose entitlement to benefits, if their employment status is wrong.

Check employment status for tax purposes

For tax purposes, you can check someone’s employment status online to see if a worker should be classed as employed or self-employed.

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Part of Employ someone: step by step

  1. Step 1 Check this process is right for you

    Follow these steps if you're taking on someone with the employment status of 'employee'.

    1. You are currently viewing: Check who counts as an employee

    There are other steps you may need to take first if you have not employed someone before.

    1. Get ready to employ someone for the first time

    The rules are different if you want to take on someone with another type of employment status, such as agency staff, freelancers, consultants and contractors.

    1. Check your responsibilities when you take on someone with a different employment status and contract type

  2. Step 2 Recruit someone

    You need to advertise the role and interview candidates. You can use a recruitment agency to do this or do it yourself.

    1. Find out about recruiting someone yourself on Acas

    As an employer you must make sure you recruit employees fairly.

    1. Avoid discrimination during recruitment
    2. Make your application process accessible for employees with disabilities or health conditions

  3. and Check they have the right to work in the UK

    1. Find out how to check an applicant's right to work

  4. and Find out which DBS check is right for your employee

    You may need to check if someone has a criminal record, for example, if they'll be working in healthcare or with children. This is known as a Disclosure and Barring Service (DBS) check.

    1. Find out which DBS check is right for your employee
    2. How to do a DBS check

  5. Step 3 Check if they need to be put into a workplace pension

    1. If you’re employing someone for the first time, use The Pensions Regulator’s tool to find out what you need to do
    1. If you already employ people, check your ongoing duties on The Pensions Regulator website

  6. Step 4 Agree a contract and salary

    When someone accepts a job offer they have a contract with you as their employer.

    1. Check what the National Minimum Wage is for different ages
    2. Check what the National Minimum Wage is for different types of work
    3. Check what to include in a contract
    4. Agree a written statement of employment particulars

  7. Step 5 Tell HMRC about your new employee

    You must tell HMRC about your new employee on or before their first pay day.

    1. Tell HMRC about a new employee
    2. Get their personal details and P45 to work out their tax code
    3. If you don’t have their P45, use HMRC’s ‘starter checklist’
    4. Check what to do when you start paying your employee

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