What is Employment Status?

A person's employment status outlines the rights and protections to which an individual is entitled while at work and establishes what is required of the employer.

Employees will have varied rights based on their employment status; therefore, businesses must understand the many forms of employment status so that the appropriate one may be used at the moment of recruitment.

Employment status concerns typically arise when there is a disagreement between a company and an employee.

An employer must appropriately determine the employment status of their employees, whether they are directly employed or self-employed. When employing a new employee, firms must consider the sort of labour required by the individual to choose the appropriate type of employment status. Different kinds of work need different things from the employer and the employee.

There are three primary types of employment status:

  • Employees with full employment rights who work under a contract of employment;

  • Those who are genuinely self-employed and work as independent contractors; and

  • Workers are those who are in between employment and self-employment.

Different employment status types


An employee is a person who works under the terms of an employment contract. To be considered an employee:

  • An individual is required to accomplish tasks on their own;

  • The employer must be required to give the job, and the employee must accept the task; and

  • The employer must control how the employee performs their duties.

Employee rights include:

  • protection from unjust dismissal;

  • statutory redundancy compensation;

  • maternity and paternity leave and pay;

  • parental leave;

  • the ability to seek flexible working; and

  • the right to preferential payments in the case of an employer's insolvency.


You are self-employed if you are your employer, operate your firm, and are entirely accountable for its success. The same employment rights do not cover them as workers since they do not have an 'employer' in the same sense.

If a person is self-employed, the following characteristics will be present:

  • They are in command of how and when they work;

  • They can send someone else to perform the work if necessary;

  • They can work for different customers and charge additional costs;

  • They do not receive holiday or sick pay when they are not working; and

  • They submit bills after their work is completed.


A worker is a 'halfway house between employee and self-employed.

A person is typically described as a 'worker' if they have an agreement to do work or services; they are required to show up for work even if they do not want to; they cannot outsource their work to other individuals, and they are not performing the job as a limited business.

Workers are often individuals in the gig economy (casual employees and zero-hour contract workers), agency workers, and seasonal workers.

Workers are entitled to the following rights:

  • Being paid the minimum wage;

  • Receiving the statutory minimum holiday pay;

  • Not working more than 48 hours a week on average or having the choice to opt-out of this privilege if they so desire;

  • Not to be mistreated if they work part-time;

  • Protection from illegal discrimination; and

  • The legally required minimum length of rest breaks.