Employment law also referred to labor law is the body of laws that administrate the rulings, and precedents which then addresses the legal rights and restrictions of working people, and organizations which they are working for. The laws mediate the crucial aspects of relationship in between the traders union, employers, and employees. The laws govern how the employees receive their wages and the hours they have worked, safety and health standards, health benefits, retirement standards and work compensation. A person employment status establishes how his/her rights and their employers responsibilities will be in employment law. There are various types of employment status some of which are; worker, employee, director, officeholder, self-employed etc.
Who is a worker? A worker is anybody who works for and employer, be it under contract or permanent employment where the individual undertakes any work or service. What is being self-employed? It is to have a contract to provide a service over a period of time for a fee, and managing the business in your own time, comfort and right. (Benny, 2012)Paying your own income tax and National Insurance Contributions is one of the characteristics of being s elf employed. Self-employment an individual does not have employment rights since you are the boss and, therefore, decide on what is going to be done i.e. you will decide on what amount you will charge for the work done and how long you will take as a holiday break. (Collins, 2010)
The Employer on the other side can either be one of the following: an individual, an entity, or a corporation etc. or other kinds of organizations. In most cases, a person who is found to be an employer and services which are done to his/her orders in which heemployees/employee has to do it. An employee is considered as a worker only if the relationship between the two strictly meets the common-law or the employment law. Employment status is extremely valuable and should be determined at all costs because it plays a tremendous role in defining if a person is employed or self employed. An employer is obliged to cut off income tax and National insurance contributions from the salary which the employee is to receive before paying the employer. In return, the employee is entitled to all basic statutory employment rights like; statutory redundancy pays, right not to be unfairly dismissed; maternity or paternity leave etc. (Benny, 2012)
So why is it so vital to determine the status of employment? A real matter of competitiveness and cost are considered in determining the status of employment. It is crucial to get the status of the worker's employment right as it affects how tax and National Insurance contributions are calculated, and also it determines whether you have to use the PAYE on the earnings. So the consequences that come in if the status is not gotten right are; the victim might end up paying unnecessary taxes, NICs, interest or even possible fines later, which is not, great news to the receiving end. (Lewis, 2004) In most cases, people get fines due to lack of knowledge of this precious information, and others ignore or don’t want to learn. The employment status applies for every worker whether the workers are part-time, permanent, casual or temporary. Employment status as seen is not a matter of choice but it is fact and it should and is dealt on the terms and conditions that are used in an organization. (Lewis, 2004)
There are various ways of a worker to know the employment status i.e. the Employment Status Indicator is an online tool that combines a series of questions about the working relationship between you and your worker, this method is easy and quickest way of getting to know whether you are self employed or employed by getting the results from the HMRCs view. Ways of determining if a worker is an employee are; you can control the worker and order him/her, how and where to do something’s etc. (Twomney, 2009) The other way is they have to do work for themselves; a worker can be moved from different tasks. They are contracted to work a number of hours. Other indications that may show that a worker is self employed are such as; someone else might be hired to do a piece of work, they can be paid a fixed price on whatever kind of job they have done, or a profit or loss can be made. (Twomney, 2009)
It’s essential for an employer or self employer to have the knowledge of employment status; to avoid penalties. The ability to know your employment status is critical, in that, it gives the worker the leverage to know what to do in case the employer tries to pull a scam or tries to rob you. Getting to know this rules that govern employment is an excellent deal to all in the world of business. It has proven that everyone who engages in the world of business needs to know the essentials of employment.