Employed or Self-employed?

An employee is a worker who has entered into, or works under, a contract of employment. A self-employed person is a worker who is an independent contractor and who usually works under a contract for services, but it can be difficult to establish which of these an individual is.

In relation to tax and employment law, where your business engages an individual worker and does not put them on PAYE as an employee, and the business pays their invoices for services rendered by them, you will always need to consider whether that worker is in law genuinely self-employed, irrespective of the expression used to describe their status or the title or content of a contract under which they are engaged. Similarly, if you are the individual concerned, you will need to consider what your status is in law.

Despite arrangements made with the intention of creating a self-employment relationship, the legal position still might not amount in law to self-employment. It is therefore always advisable to take relevant legal advice on your particular circumstances.

It is important to be clear that if (but only if) a worker works through a PSC, i.e. the worker is not directly engaged by a business, then both the worker and the business also need to consider the “IR35” information pages. See also "Related Documents" below.