The employment status of a person can determine what their rights are and what their company’s responsibilities are. According to tax law, the status may be different.
Employment status usually falls into either employee, worker, self-employed or contractor, office holder or director. A worker has to attend work even if they don’t want to. They will receive a reward, a benefit in kind or money, for carrying out work themselves. During the term of the contract, the employer has to provide work for them to do.
If a person holds a position within an organisation or company, but isn’t paid on a regular basis and has no a contract, they may be an office holder. An example of an office holder is a club treasurer or a clergy member.
Self-employed status
If a person is self-employed, they have complete responsibility for the work which they do, when they carry out the work and who they work for. A self-employed person doesn’t have any employment rights. It is possible for an individual to fall into this category and be employed simultaneously, working for an employer part of the time and for themselves for the remainder.
For legal purposes, an employer should check whether a person has the rights of an employee. For tax law, the employer has to establish whether or not they are subject to Pay As You Earn.
How can you determine whether or not you are self-employed?
There are various factors used to determine if a person is self-employed or not. If most of these criteria are fulfilled, then the person is probably self-employed. If an individual is liable for all costs of running the business, including the purchase of tools, they are probably self-employed. Similarly, if that person can work when they like, for who they like, and how they like, this is an indication of self-employment.
There are many factors used to determine employment status, and advice may be required from management accountants.
Are you employed?
If you have to work set hours and receive regular remuneration, statutory sick pay and other benefits, you are most likely employed and should be paid through the PAYE system.
It can be difficult to assess whether a person is self employed or employed in some situations. To avoid being in breach of tax law, it is advisable to seek advice. Contact us today if you want to know more.