I am self-employed. Am I entitled to holiday pay or any other benefits from my client?

Most self-employed people are not entitled to any employment benefits from their clients. However, if a self-employed person meets the definition of an “employee” – perhaps because the client has decided to put the person on the payroll – or the definition of a “worker”, there may be entitlement to some employment and statutory benefits.

A number of employment rights and benefits are available to “employees”, defined in the employment legislation as “an individual who has entered into or works under a contract of employment”. In turn, a “contract of employment” is defined as “a contract of service or apprenticeship”. Therefore, if an employer has decided that you are employed under a “contract of service” and puts you on the payroll, you are entitled to rights such as a written statement of employment particulars, an itemised payslip, guarantee payments, maternity/ paternity/ adoption/ parental leave and pay, notice of termination, dismissal and redundancy.

A number of other employment rights are available to “workers”, e.g. protection of wages, statutory holiday pay, national minimum wage and flexible working. Anyone who is an employee is also a “worker”, so is automatically entitled to these additional rights. The term “worker” also includes people who are commonly described as “contractors” and who generally claim to be self-employed. However, it is not always easy to distinguish between persons who are contractors and those who are genuinely self-employed.

If you run a business or have a profession, have a number of clients or customers, and often work for two or more of them concurrently, you are probably not a “worker”. You work under a “contract for services”. (See What is the difference between a “contract of service” and a “contract for services”?)

However, if you don’t have a business or profession of your own but work for one business at a time for the duration of a project, you are likely to be a “worker” and entitled to the statutory rights listed above for workers. In particular, the longer the period of the project, the more likely you are to be a “worker”. Examples of contractors who have been identified as “workers” by employment tribunals are skilled tradesmen in the construction industry (e.g. bricklayers, carpenters), contract salesmen, self-employed commission agents. (SeeThe Construction Industry contractor I work for deducts tax from my invoiced payments. Is the contractor required to pay me holiday pay?)

Note that, in order to be classified as a “worker”, you do not have to be on the payroll of the business for which you are working as a contractor. Even though that business may properly treat you as being self-employed and pay you on invoice, you are still entitled to, for example, all of the rights set out in the Working Time Regulations, including paid holiday leave, as long as you satisfy the definition of “worker”.

More FAQs Related to Employment Status – Employed or Self-employed?
What is the difference between a “contract of service” and a “contract for services”?
Who are “employees” for payroll purposes?
I am self-employed. Am I entitled to holiday pay or any other benefits from my client?
I am a company director. Am I an “employee” or a “worker”?
I find work through a recruitment agency. Am I an “employee” or a “worker”?
I am self-employed. Why does my client insist on putting me on the payroll?
My company is a managed service company. Am I an “employee” or a “worker”?
I am subject to IR35 rules. Am I an “employee” or a “worker”?

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Payroll Update 2013