Employee, worker or genuinely self-employed?

The question whether an individual is an employee, worker or self-employed is complicated, but it is best to start with the statutory definition used to decide entitlement to most statutory rights.

According to section 230 of the Employment Rights Act 1996 (ERA 96), an employee is somebody who works under a contract of employment (whether or not it is written down), and a worker is any other individual who works under a contract “to do or perform personally any work or services for another party to the contract, whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual”.

An employment contract has three essential elements, established more than 40 years ago in the case of Ready Mixed Concrete Limited v Minister of Pensions and National Insurance [1968] 2QB 497:

• there must be mutuality of obligation between employer and employee;

• the contract must impose an obligation on a person to provide work personally; and

• the worker must agree (expressly or by implication) to be subject to the control of the person he works for to a “sufficient” degree.

The rest of this Chapter looks at each of these conditions in turn.