There are 2 main type of contract workers –
An independent contractor, controls their work schedule, utilizes their own tools and equipment, and bears the financial risk for their work.
Dependent contractors retain a level of economic dependence on a single “principal” (the company that hires them).
Independent contractors do not have any employment rights. Dependant contractors who are not employed by their company whom they provide services for still have employment rights, but they are less protected than a regular employee.
- Right to written terms – a written statement of employment requirements
- right to be paid the national minimum wage
- entitlement to paid holidays
- right to itemised pay slips
- protection from dismissal under whistleblowing laws
- protection against unlawful discrimination
- right not to be treated unfairly if they work part time
Contract workers are not entitled to sick leave, maternity or any other types of parental leave. However, they can take time off and make themselves unavailable for work during such periods.
Workers remain self-employed for tax purposes and pay taxes via self-assessment and not PAYE system.
Agency workers
The term agency worker covers a worker who has a contract with an agency but who provides their services to the agency’s client which has a separate contract with the agency. The client pays the agency for the worker’s service under its contract with the agency and then the agency pays the worker under its contract with the worker. An agency worker is usually controlled in terms of their working activities not by the agency but the agency’s client. This arrangement does not amount to a contract of employment between the worker and the client or the agency, so the agent worker has no employee rights.
Apprentices
An apprenticeship contract is different from a regular employment contract. Under an apprenticeship contract the employer undertakes to train and educate the apprentice in practical and other skills needed to practise a skilled trade. Even though an apprenticeship contract is not a contract of service, it is still considered a contract of employment, and the apprentice would have all the employee rights.
Office Holder
A person who’s been appointed to a position by a company or organisation but does not have a contract or receive regular payment may be an office holder. This includes statutory appointments, such as registered company directors or secretaries, board members of statutory bodies.
If the office holder rights and duties are defined by the position they hold and not by contract, for example, a non-executive director of a company who performs no more than the duties of a director, such as attending board meetings in return for a fee, will in general not be considered an employee. An executive director of a corporation is likely to be considered an employee, as they provide further services to their company.
