For there to be an employment there must be a contract of service. The nature of a contract of service is that the employer controls how, when and where the work is done. Usually the work is done on the employer’s premises using the employer’s tools and materials.
It is a relationship “of service” as opposed to someone agreeing to provide services as in a self-employed contractor role. The employer must exercise sufficient control over the employee and how he works. Lawyers still refer to the concept of “master and servant” when distinguishing a contract of employment from other contractual relationships.
There must be a mutuality of obligations between employer and employee. This is the case where the employee is obliged to work and the employer is obliged to provide him with work and to pay him for it.
It is essential to a relationship of employment that the obligation is a personal one, and the employee is personally obliged to do the work himself, as opposed to getting someone else to do it.
Self-employment involves a separate business venture by the person doing the work, who will normally risk their own capital or take some other financial risk in doing the work. Self-employed people usually promote their services and work for a number of different clients or customers.
The law distinguishes between a “worker” and an “employee” so that some employment rights apply equally to both even though the worker is not working under a contract of employment. For example, the Minimum Wage Act and the Working Time Regulations both apply to a “worker” (which is defined to include employees and also others who personally undertake to do work for another under a contract, whether written, oral, implied, or express, but not where the work is part of a profession or business undertaking carried on by the worker).
There are specific provisions about home workers and agency workers who are not necessarily employed by the person whose work they do.
Someone who is genuinely self-employed, i.e. carrying on a recognised profession or engaging the services of others in his or her business will not be treated as a worker in relation to the work they carry on for the clients or customers of their business or profession.
However, only an employee is protected from unfair dismissal and has the right to redundancy pay under the Employment Rights Act 1996.
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