UK Workers vs Independent Contractors

Who is considered a "worker"?

The UK has another employment category called ‘workers’, which operates under IR35, or the Off-payroll working rules. Generally, workers are not self-employed individuals and employees and are commonly known as casual workers or agency workers. Employing workers is a significant expense, especially if you’re planning to hire many people, so it's critical to distinguish between a worker and a self-employed individual and an employee.

According to the UK government, a worker is an individual who is hired to personally do work or services for a reward, which is money or benefit in kind (a promise of a contract or future work). Workers are not self-employed, or part of their LLC, wherein the employer is considered a client or customer. The relationship is mutually beneficial; the employer offers work, and the worker accepts it.

Determining an individual as a worker

Here are some criteria that you can refer to to determine whether an individual is a worker.

• They engage in casual or irregular work. They are not committed to certain hours or a specific schedule.
• They occasionally do work for a specific business and work when they want to.
• The business is not obligated to offer them work.
• Terms of agreement often include words like ‘casual’, ‘freelance’, ‘zero hours’, and ‘as required’. These terms are agreed upon verbally or in writing.
• They do not run their own business like a self-employed individual. They don’t advertise their services and cannot outsource work to others.
• They are under the supervision of a manager or director during the engagement.

Hiring a Worker

As a business, you are obligated to:

• Provide the worker with materials, tools, and equipment needed to do the work.
• Deduct tax and National Insurance contributions from their wages.
• Take on most, if not all financial risk

Employment rights that workers are entitled to:

• National Minimum Wage
• Protection against unlawful deductions from wages
• The statutory minimum level of paid holiday
• The statutory minimum length of rest breaks
• Protection against unlawful discrimination
• Protection for whistleblowers
• Not be treated less favorably if they work part-time

Benefits workers may be entitled to:

• Statutory sick pay
• Maternity pay
• Paternity pay
• Adoption pay
• Shared parental pay

Benefits workers are NOT entitled to:

• Minimum notice periods if employment is ending
• Protection against unfair dismissal
• Right to request flexible working
• Time off for emergencies
• Statutory redundancy pay