Are You an Employee or a Self-Employed? How to Spot the Difference

With hot-desking and home working becoming the norm in our technologically advanced society, it is sometimes difficult to tell whether you are an employee or a self-employed.

Some businesses prefer to keep their employees at arm’s length because it saves them money on employer’s National Insurance.

employment law lawyers

But just because you think you’re self-employed, it doesn’t necessarily mean you are, and
being ignorant could mean you lose out on valuable employee rights.

Employees’ Rights

Employees have a lot of rights in the workplace. They can’t be sacked without a valid reason and they can claim holiday pay and sick pay.

Having a contract of employment makes it much easier to secure loans or a tenancy agreement.

Being employed is more secure and you won’t lose sleep worrying about when you are next going to be paid.


Self-employment suits a lot of people, but it has its ups and downs. When you are self-employed, you are free to work whatever hours you like, set your own fee rates, and work for anyone you like.

On the downside, work can ebb and flow, it’s harder to get a mortgage unless you have at least three years of accounts, and not all landlords like people who are self-employed.

At first glance, it might appear obvious that you are self-employed, but if you only have one client and you work out of their office, is it really so clear-cut?

A Grey Area

Some contractors are self-employed, but they might start working for a major client, which leads them into a grey area. Take a look at the following example: Clive is an IT contractor. He designs software systems for small businesses.

Clive wins a big contract to install a new software system for a large business.

The job is estimated to take around six months.

The client asks Clive to work on-site and use one of their laptops, to avoid any security issues.

He soon gets to know his fellow workers and before long, Clive is invited to work functions and treated as “one of the team”. He even has the opportunity to attend the Christmas dinner!

If HMRC looked at this scenario, they would say Clive was an employee. Why? Because to all intents and purposes, he is being treated as an employee. This is why it is such a tricky area and you need to understand your rights. In addition, employers need to be careful when employing contractors for their business.

Employees don’t usually work for several different clients. They are not expected to provide their own tools and equipment. They are also entitled to benefits.

If you feel you are an employee and your employer is refusing to give you a contract of employment because they say you are self-employed, you need to talk to an employment lawyer that specialises in employment law for employees.

Employment law experts can offer practical advice on all aspects of employment including harassment in the workplace and unfair dismissal.

Being treated as self-employed when you are really an employee is not great. You will miss out on useful benefits and could end up being paid less. Make sure you know the difference!