IN THE UK
Know your rights
©Just Good Work 2022
Information correct at January 2022
What qualifies as self-employed?
You may be considered as self-employed (also known as a contractor) as an individual worker, or as part of your own business. It is possible to be regarded as self-employed for tax purposes by HMRC and have a different status in employment law. It is important to know your status for both, to understand your rights and obligations.
What are my rights?
All workers have rights in the UK, but some rights depend on what type of worker you are. Some of these rights include: the right to lawful minimum wage, with protection against unlawful deductions; rest breaks; protection against discrimination and protection for reporting wrongdoing in the workplace.
Everyone has the right to:
be treated with dignity
not be abused or harassed at work
not be bullied to work against your will
not work in poor conditions
If you have a verbal or written agreement to work for reward, whether wages or benefit, and your employer is not actually your customer or client, you are a worker.
If you have an employment contract with your employer which sets out terms of employment you are an employee.
If you run your own business, you are not covered by employment law, but you still have some protections related to health and safety and in the terms of your contract. If you are self-employed, you will not be paid through PAYE and do not have the rights of an employee.
What is my tax status?
It's important to know how you are classified by your employer as this will affect your tax contributions and benefits. You need to pay the correct national insurance contributions in order to be eligible for a state pension and other statutory rights. You need to pay the correct tax so that you are not confronted with a large bill later.
There are different ways to work for yourself.
If you are self-employed and do not run your own business, it is still very important to keep records for tax purposes. This includes keeping track of your income and expenses. If you work for many different clients, it might be worth seeking the help of an accountant. If not, you could keep a spreadsheet, or use an app that helps you record income and expenses.
There are a range of apps available to help you record income and expenses. Some are free or charge a fee, depending on the services offered. It's a good idea to shop around and find out which is the best fit for your circumstances.
Important Action: If you earned more than £1000 in the tax year from self-employment or you want to claim certain benefits, you will need to set up as a “sole trader” and file a self-assessment tax return every year.
How to fill in a self assessment tax return if you are self-employed (Recorded webinar)
Warning: Self-employed or agency workers may be offered opportunities by an employer to increase take-home pay by paying less tax or NI contributions. Beware that this may be a tax avoidance scheme that will cost you later.
The Off-Payroll Tax
Rules about the off-payroll tax changed in April 2021. This may affect you if are a worker known as a freelancer, consultant, or contractor, who provides services through your own limited company or another type of intermediary to the client.
An intermediary will usually be the worker’s own personal service company, but could also be a partnership, a personal service company, or an individual.
These new rules make sure that workers, who would have been an employee if they were providing their services directly to the client, pay broadly the same Income Tax and National Insurance contributions as employees. These rules are sometimes known as ‘IR35’.
HMRC provides a helpful tool to use to check if your status has been correctly determined, whether by you or by an agency or employer.
You can also find out:
who is responsible for deciding a worker's status,
who the rules apply to,
when the rules apply,
If your client determines that the rules apply to an engagement, they should give you a ‘Status Determination Statement’, which will explain their decision. You may be asked to provide your client with some information to help them make their determination.
Should I be self-employed? What works best for me?
The off-payroll tax is causing many self-employed workers to consider the benefits of working as an employee. Often, this means working with a zero-hours contract. There are different benefits to each status, depending on your potential wage and obligations.
For example, those who are self-employed are not entitled to holiday pay, sick pay or minimum wage, whereas those on zero hours are entitled to holiday pay and minimum wage.
Those who are self-employed are required to arrange their own national insurance contributions to ensure that they are eligible for a state pension, whereas their employer is responsible for doing so for those under zero hours contracts.
Tip: When you are self-employed your employer may or may not offer options for insurance and pensions. Find out more about these investments in your future here: Pensions for self-employed people (moneyhelper.org.uk)
Compare the options
Freelancers, consultants, or contractors
If you are a freelancer, consultant, or contractor it means that:
you are self-employed or are part of other companies
you often manage your own tax and National Insurance contributions (NICs)
you might not be entitled to the same rights as workers, such as minimum wage, or holiday pay
your employer is still responsible for your health and safety
From Contract types and employer responsibilities: Freelancers, consultants and contractors - GOV.UK (www.gov.uk)
Zero hours contracts
If you have a zero-hours contract, or casual contract, it means that:
you are available on call to work when the employer needs you
your employer does not have to give you work
you can say no to work
you have the right to accept work elsewhere. The law says you can ignore a clause in your contract if it bans you from looking for work or accepting work from another employer.
You are entitled to statutory annual leave and the National Minimum Wage in the same way as regular workers and your employer is responsible for the health and safety of staff on zero-hours contracts.
From: Contract types and employer responsibilities: Zero-hours contracts - GOV.UK (www.gov.uk)
Health and Safety for Self-Employed Workers
A few health & safety considerations:
Your employer must provide you with a safe working environment that does not put your health at risk.
All workers have the same protection under UK health and safety law, regardless of status.
Any risks to health and safety on the job should be properly controlled.
You should always use personal protective equipment (PPE) whether supplied by you or your employer.
If you are self-employed, you have to provide your own PPE which meets the required standards of the workplace, unless you are working solely with one employer on a full-time basis, in which case the employer should provide the PPE. If your employer does not supply PPE, you should make sure you are adequately compensated for any expenses you incur to acquire the necessary PPE or equipment required to do your job safely and effectively.
You should receive training to understand the risks in your work and how to do your job safely. All training should be within agreed working hours, and you should be paid for it as normal.
If you are pregnant, your employer must make sure that your work does not put you or your baby at risk.
Health and safety includes having regular access to bathroom and hygiene facilities and adequate time and facilities for rest and meals.
What do I do if I think my health and safety is at risk?
If you require any changes to be made to enable you to work safely and with dignity, tell your employer. If there are other workers experiencing the same problems, go to your employer together.
If you feel unsafe at work or you see something that could cause harm to you or someone else, speak to the person in charge of the work, your employer, or your union or employee representative. In many instances, the managers or employers may be unaware of the situation and will seek to make it right.
Violating health and safety law is a serious matter and employers can face serious consequences if they do not comply.
If you think that your employer is not taking the right steps to make your workplace safer, then consider contacting your employer’s boss, or contact the Health and Safety Executive (HSE)
Where Can I Get Help?
The Just Good Work app has lots of advice for people working in the UK
Citizens Advice for information or if you need to speak to someone
HMRC for self-employment and tax advice
ACAS for advice and support on employment law and human resources
Jobs Aware for help and advice for UK workers who have suffered from job scams or unfair working practices