Legal advice: Employee or self-employed?

By Lucy McNamara of thePublican.com's team of legal experts from London solicitors Joelson Wilson.​

A recent article explained the difference between an employee and a self-employed person. It is important to be clear about the distinction, because certain rights and duties exist between an employer and employee that the self-employed are not entitled to.

The main point is that employees have more protection than the self-employed and can bring claims against the employer for a failure to meet certain duties. These include maternity rights, protection from unfair dismissal and entitlement to a redundancy payment, statutory sick pay and the minimum period of notice, to name but a few. Consider the following scenario and you may be surprised at the difference in treatment depending whether the person is an employee or self-employed.

An assistant bar manager has been working at a bar for four years. She has migraine and cannot work for a week. She does not receive any salary during her absence. Business at the bar where she works is not good and the owners decide to make cuts. The assistant bar manager returns to work in a great mood because she has discovered she is expecting a baby. She is selected for redundancy because she is going to be away from the business on maternity leave anyway and told to leave immediately. She does not receive any further payments from the bar.

If the assistant bar manager is an employee (which is usual for this kind of position) she would probably be able to bring a number of successful claims against her employer, including: unlawful deduction from wages (because she was not paid sick pay or pay in lieu of her notice period), unfair dismissal (because it was by reason of her pregnancy), a redundancy payment and sex discrimination (because the dismissal was on the grounds of her pregnancy).

If, on the other hand, the assistant bar manager is self-employed, she would not be entitled to bring all of the above claims. A self-employed person's main protection is found in his or her contract with the business, although the self-employed also have protection against discrimination.

Whether she is self-employed or an employee, the assistant bar manager could win an unlimited award in respect of the discrimination claim. If she is an employee, however, she could win awards of up to £60,000. For a bar that wants to make cuts, this level of liability could be fatal.

Workers and businesses should both ensure that there is clarity in respect of any worker's status - businesses need to know the risks and workers need to know their rights.

The employment risks and rights still exist even if the business and the worker agree that the worker is self-employed. So what's in a name? Very little, as a matter of law.