What are the 3 main types of employment status?
Employment status is someone's legal status at work, which determines their employment rights and responsibilities in the workplace - as well as the employer's responsibilities. In the UK, employment status falls into three primary categories:
Employees work under an employment contract, which includes regular working hours, paid leave, and more. This employment status is the most ‘extensive’ in terms of employment rights for employees in the UK
Workers may not have a formal contract of employment, but they have a contract to carry out work or services
Self-employed describes those who operate their own business and contract with clients rather than taking on employment contracts
These are all defined by the Employment Rights Act 1996.
Someone's employment status is determined by their contract, what they agreed to when they accepted the role and their ways of working.
What is casual employment?
While UK law doesn't provide a specific definition for casual workers, they're typically identified based on the non-standard and unpredictable nature of their work, as well as their freedom to accept or decline work as and when it's offered.
Here are some points that can help identify a casual worker:
It's specified in their contract: The first thing to do is check their contract to confirm their employment status - it will usually use language like "casual", "freelance", "zero hours" or "as required"
Occasional work: Casual workers typically only work for a business from time to time. They don't follow a regular, predictable schedule
No obligations: There's no commitment from the employer to offer work, just as the individual isn't obliged to accept or reject their offers
Pre-approved terms and conditions: Casual workers generally have their employment terms and conditions confirmed before they're offered work, whether this offer is given orally or in writing
Supervision and control: A casual worker will typically be under the supervision or control of a manager or director
Tax and National Insurance deductions: Casual workers usually have taxes and National Insurance (NI) deducted from their wages, much like regular employees. However, the way these deductions are handled can vary based on the nature and terms of their work
What are the different types of casual working contracts?
Casual work can be defined through a wide range of contract types, which include:
Freelance or self-employed contracts: These are people who operate independently, providing services on a contract basis
Contracted work: This includes subcontractor agreements where a worker is hired for a specific task, service, or project
Zero-hour contracts: These contracts don't guarantee minimum working hours, offering more flexibility for employers and workers
Guaranteed minimum hour contracts: The worker receives a minimum number of hours each week, offering a certain level of security
Single job assignments: These are for a single specific task or project
Short-term contracts: These are temporary contracts with a fixed end date
On-demand work: This refers to work that's offered as per demand, allowing employers to manage varying requirements, eg in peak periods
Casual worker rights vs employee rights
Casual workers have certain rights under UK employment law which differ slightly from those of regular employees.
Casual workers are entitled to the National Minimum Wage and have protection against unlawful deductions from wages. They're also entitled to the statutory paid holiday and rest breaks. They also have rights to Statutory Sick Pay (SSP), as well as maternity, paternity, adoption, and parental leave pay, provided they meet certain conditions.
There are some employment benefits that casual workers might not have access to, like protection against unfair dismissal, redundancy pay, and the right to request flexible working. The best bet is to refer to the contract or any other written agreement to confirm what benefits are available, or have an open conversation with the employer or HR department.
Holiday pay for casual workers
In the case zero-hour contracts, casual workers still hold the right to a pro-rated amount of 5.6 weeks of holiday. To calculate, you'd average their weekly pay over the 52 weeks preceding the holiday, just like for hourly workers.
You can learn more about calculating holiday pay in our guide.
When does a casual worker become an employee?
Consistent working patterns
If a casual worker starts working regularly over a period of time, and their work pattern becomes more predictable, they could be transitioning into an employee. For example, if they've been working full-time hours over several months.
Expectation or obligation of work
One key characteristic of a casual worker is that there's no obligation to work. But if a situation arises where they're expected to accept work, or the employer feels obligated to offer them work, this could signal a change in status and contracts should be reviewed.
Integration into the business
If it looks like a casual worker is fully integrating into the business - for example, if they're being given tasks that are usually reserved for employees, or are involved in decision-making processes - this could indicate that their employment status or responsibilities should be reviewed.
Dependence on the work
If the worker becomes economically dependent on the work provided and would be significantly affected if that work ended, this could indicate that there's been a shift.
Control
If there's significant control over how, when, and where the work is done, beyond what would typically be expected in a casual work relationship, this could suggest that the arrangement should be reviewed.
If you find that a casual worker may be transitioning into an employee, it's important to reassess their employment status and adjust their rights and benefits accordingly. For employers, it's recommended to seek legal advice when doing so, as getting this wrong can have significant legal and financial implications for your business.
Does a casual worker go on the payroll?
All casual workers generally need to be on the payroll, because they must be paid through the PAYE (Pay As You Earn) system. HMRC requires that they're treated through payroll the same way as permanent staff.
Casual workers are also covered by the Working Time Regulations 1998, which sets the maximum weekly working hours at 48 hours. They have the right to opt out of this limit, but it must be voluntary.
As mentioned above, casual workers are eligible for SSP, as well as maternity, paternity, adoption, and parental leave pay, subject to certain conditions. Employers are also required to enrol eligible casual workers into a workplace pension scheme and make contributions to their pension.
Read our complete guide to payroll for small business for a better understanding of how it works.
Wrapping up
It's easy for the lines to get blurred between an "employee" and a "worker", especially when someone's employment status can change over time.
Understanding these differences is important for employers and employees alike. Being aware of your rights and responsibilities helps you make sure that you're protected and treated fairly. If you're ever unsure about your own status or someone else's, it's a good idea to seek out legal advice.
Image from Unsplash published by 0xdevon
