Employment Law: Self-Employed Worker Rights Explored

Self-employed individuals are their own boss and are responsible for the success or failure of their business. They enjoy a lot of flexibility and autonomy in their work, but this also means they have fewer employment rights and protections. So, does employment law apply to them?

Well, it depends. While employment law does not cover self-employed people in most cases, they do have some protections. For instance, they have the right to protection of their health and safety, and in certain circumstances, they are also protected against discrimination.

The line between being an employee and being self-employed can sometimes be blurry, and it's important to note that the tax position may be different from the employment law position. In some cases, an individual may be considered self-employed for tax purposes but an employee or worker for employment law purposes. This is because the tax regime does not recognize 'worker' status.

Ultimately, the specific rights and protections afforded to self-employed individuals will depend on the laws and regulations of their country or region.

Self-employed workers' health and safety rights

For health and safety law purposes, a 'self-employed' person does not work under a contract of employment and works only for themselves. Self-employed individuals are generally responsible for paying their own taxes and National Insurance, and they do not have the same rights and responsibilities as an employee. However, they are entitled to protection of their health and safety and, in some cases, protection of their rights against discrimination.

The Health and Safety at Work etc. Act 1974 (General Duties of Self-Employed Persons) (Prescribed Undertakings) Regulations 2015 outlines the health and safety rights and responsibilities of self-employed workers. According to this legislation, if a self-employed person's work activity is specifically mentioned in the regulations or poses a risk to the health and safety of others, then the law applies to them. This includes work in construction, agriculture, railways, or work with gas, asbestos, or genetically modified organisms.

Self-employed workers have a duty of care, which is a common law responsibility outside of health and safety laws. This duty of care applies to everyone and entails protecting oneself and others from any risks posed by their work activities. In practical terms, this means that self-employed individuals will not have to take any specific actions if their work does not pose a risk to others.

It is important to note that the health and safety laws do not apply to all self-employed workers. Only those who meet the health and safety definition of self-employed and do not employ other workers are granted exceptions. Additionally, their work must not put others at risk, and it must not fall under any of the scheduled activities, such as working with genetically modified organisms.

Overall, while self-employed workers have some health and safety rights and responsibilities, the specific laws that apply can vary depending on the nature of their work and the potential risks involved.

Self-employed workers' rights against discrimination

Self-employed workers do not benefit from the same employment rights as employees and workers. However, they do have some protection against discrimination.

Equality Act 2010

Under the Equality Act 2010, self-employed workers are protected from discrimination based on the following characteristics:

• Marriage or civil partnership
• Pregnancy or maternity
• Race (including colour, nationality, and ethnic origins)
• Sex
• Disability
• Gender reassignment
• Religion or belief
• Sexual orientation

The Equality Act 2010 also protects people of all ages from age discrimination. An individual cannot be treated differently because of their age, whether they are considered "too old" or "too young".

Public Sector Equality Duty

If a self-employed individual is engaged by a public authority, such as a school, the public authority must comply with the "public sector equality duty". This means that the public authority must have due regard to:

• Eliminating unlawful discrimination
• Advancing equality of opportunity between people who share a protected characteristic and those who do not
• Fostering or encouraging good relations between people who share a protected characteristic and those who do not

Data Protection Act 2018

Self-employed individuals also have rights under the Data Protection Act 2018. They have the right to request information held about them and to restrict the use of their data. The Data Protection Act also imposes obligations on how to manage other people's information, which may apply to self-employed individuals, especially if they are sole traders.

Self-employed workers' rights and responsibilities as set out by their contract

Self-employed workers have some rights and responsibilities that are set out by the terms of the contract they have with their client. While self-employed workers are not covered by employment law in most cases, they do have certain protections and rights.

Rights and Responsibilities

• Health and Safety: Self-employed workers are responsible for their own health and safety while working. This means taking reasonable steps to ensure their working environment is safe and does not put themselves or others at risk.
• Discrimination: Self-employed workers are protected by laws against discrimination on the basis of age, race, gender, religion, sexual orientation, or disability. This protection applies when they carry out the work personally and do not subcontract it out or employ staff to do the work.
• Tax and National Insurance: Self-employed workers are responsible for paying their own taxes and National Insurance contributions. They need to register as self-employed and file a self-assessment tax return each year.
• Intellectual Property: Self-employed workers who create original work may have intellectual property rights and should seek specialist advice to understand and protect these rights.
• Dispute Resolution: If a dispute arises with a client or customer, self-employed workers may need to use alternative dispute resolution methods such as mediation or arbitration. If this is not successful, legal action may be necessary through the County Court or High Court.
• Protection against Unfair Contract Terms: Self-employed workers have some protection against unfair contract terms under the Unfair Contract Terms Act 1977 and the Consumer Rights Act 2015. These Acts allow for arguments that certain unfair or unreasonable clauses in a contract may be unenforceable.
• Right to Work: Self-employed workers have the right to work for themselves and provide services to others, but they must ensure they have the right to work in the country and comply with any visa or immigration requirements.
• Data Protection: If self-employed workers handle personal data, they must comply with data protection laws, including keeping any personal data secure and only using it for legitimate purposes.
• Insurance: Self-employed workers may need to take out insurance, such as public liability insurance, professional indemnity insurance, or business interruption insurance, to protect themselves and their business.
• Retirement Savings: Self-employed workers do not have access to an employer pension scheme, so they need to plan for their retirement by setting up a personal pension or other savings plan.

Exclusions from Employee Rights

While self-employed workers have certain rights, they do not have the same employment rights as employees. They forfeit the right to:

• Maternity, adoption, and paternity leave and pay
• Not be unfairly dismissed
• Statutory redundancy pay
• The National Minimum Wage
• Rest breaks, paid holiday, and limits on night work
• Protection against unauthorised deductions from pay

Self-employed workers' tax obligations

Self-employed workers have different tax obligations than traditional employees. Self-employed individuals are generally required to pay estimated taxes each quarter and file annual income tax returns. They must pay self-employment (SE) tax on top of income tax. The SE tax rate is 15.3% of their earnings, with 12.4% going to Social Security and 2.9% going to Medicare tax. Those who earn less than $400 annually are exempt from paying these taxes.

Self-employed workers are responsible for paying their own National Insurance and tax. They do not receive holiday or sick pay and are not paid through PAYE. They are also not entitled to employee benefits such as paid days off, health insurance, or retirement benefits. Self-employed workers must ensure they remain profitable and find work for themselves, as well as abide by the tax laws and filing requirements in their country.

In the United States, self-employed individuals use Form 1040-ES to figure out their estimated taxes and Schedule C to report any income or loss from their business. They also use Schedule SE to report their Social Security and Medicare taxes.

In Canada, self-employed individuals must register for GST/HST if their revenue exceeds $30,000 in one calendar quarter or over four consecutive calendar quarters. They should keep thorough records of their income and expenses, supported by original documents, and maintain these records for six years.

Self-employed workers' rights under data protection legislation

Self-employed workers have certain rights under the Data Protection Act 2018. These rights include the ability to request information about themselves from businesses, organisations, or the government, and how that information is being used. They also have the right to restrict the use of their data and object to the way it is processed in certain circumstances.

The Data Protection Act 2018 also imposes obligations on self-employed workers in terms of how they manage other people's information. This includes keeping employees', clients', and suppliers' information secure and up to date, and obtaining consent before collecting certain types of data.

In addition to the rights and obligations under the Data Protection Act, self-employed workers are also protected from discrimination under the Equality Act 2010. This means that they cannot be discriminated against due to their marriage or civil partnership, pregnancy or maternity, race, or nationality, among other things.

While self-employed workers do have some rights and protections under data protection and equality legislation, it is important to note that they do not have the same protections as employees under employment legislation. Self-employed workers are generally not covered by employment law because they are considered to be their own bosses. As such, they do not have the same rights as employees in areas such as minimum wage, protection against unfair dismissal, rest breaks, and limits on night working hours.

Frequently asked questions