Employment Status

What is Employment Status?

Employment status in the workplace refers to a person's employment situation. Consequently, this may impact their legal protections in the workplace.

Workers' legal entitlements vary depending on their job position. There are some obligations that an employer must meet in exchange for an employee's services, and they rely on the nature of the relationship between the two parties.

The company is responsible for employing new employees to determine the appropriate classification of the position being filled.

Types of Employment Status

An individual's legal protections will vary depending on their employment situation. To a certain extent, it is subject to the nation's laws. People may be classified as either workers, employees, or self-employed. Both employers and their employees must know exactly who they are dealing with regarding legal obligations and protections.

Your company may have provided you with written documentation that indicates your employment status. But how you and the company actually collaborate will decide your employment status for legal protection.

Three types of employment status are:

1. Worker

Any person who performs services or works for another person in exchange for payment is considered a worker, regardless of whether they are a worker or have entered into another kind of contract.

Fundamental rights and safeguards for workers exist in all modern labor systems. As a worker, you have the following employment rights:

• The National Minimum Wage 
• Rest breaks
• Paid holidays 
• Limits on night work 
• Sick pay rights
• Paternity, maternity, and adoption pay 
• Protection from unauthorized deductions from salary
• Protection from unlawful discrimination 
• Protection from biased treatment 
• Working time restrictions (the 48-hour work week) 
• Payments and pay stubs
• Reporting workplace misbehavior 

2. Employee

If you work under a contract of employment, you are classified as an employee. A contract does not have to be in writing; it exists when you and your employer agree on the terms and conditions of employment.

Aside from the standard benefits and protections enjoyed by workers, employees also have the following privileges and obligations in the workplace:

• Paid time off for dependents
• Paid maternity, paternity, and adoption leave
• Paid time off for the death of a parent
• Paid redundancy pay after two years of service
• Public holidays leave
• Minimum notice before dismissal or redundancy and the right to sue for unjust termination after two years of employment are all guaranteed to employees.
• After 26 weeks of continuous employment, employees are entitled to seek a more flexible work schedule and are protected from retaliation if they take action on a health and safety problem.

3. Self Employed

You don't have a formal employment agreement when you work for yourself. Instead, you'll likely be an independent contractor hired to provide services for a fixed period. Moreover, you'll be responsible for your tax payments and NI contributions. 

If you're self-employed,

• you're your own employer and have complete control over your income and benefits. Therefore, you have different protections than an employee.
• There is no legal safeguard for you.
• You have the right to a free and fair workplace devoid of discrimination and one free from hazards.
• You own your own business or are a freelancer, and you get to set your hours, decide who you work for, and whether or not to give them a salary.
• You are not an employee or worker and are thus not entitled to the same workplace benefits, protections, or duties.

Types of Employment Status in the United States of America

U.S. tax authorities do not differentiate between job types. Instead, they simply label people as employees or independent contractors in terms of taxes. The three factors used to create this categorization are:

• Relational: Implied or explicit contracts, perks, or other aspects tying employer and employee constitute a relationship.
• Behavioral: Whether the employer has any control over how the work is carried out.
• Financial: The existence of a fixed income or compensation.

In the absence of all three, the IRS classifies the worker as an independent contractor. Although independent contractors make up the largest segment of the non-employee workforce, they are not the only kind of worker.

How Can You Determine Your Employment Status?

When it comes to determining your employment status, no one factor is the only determiner.

Your employment status may be characterized by how reliant you are on the organization for work, whether you are expected to do the work yourself, and how much power the organization has over you and your work.

Your work status is significant since it impacts your legal rights, entitlements, and what may be expected of you.

What Happens When Your Employment Status Cannot Be Determined? 

Whether you are a worker or an employee may not be immediately obvious based on the terms of your agreement or the nature of your working relationship.

To put things into perspective, if you

• are a worker in the "gig economy" with no specific hour of guaranteed labor.
• have a short-term or ongoing contract, such as an internship or work experience.
• are a temporary worker who owns shares in the company.

If you have one of these occupations, it's in your best interest to determine which of the three categories of job status best describes your current circumstances. In addition, consider how the terms of any contract or other official papers the company offers stack up to the terms of your working relationship.