At the moment, all EU citizens (except Croatians) are allowed to work freely in the UK, without a work permit or certificate to prove their right. There are 3 ways of working, for tax and employment purposes:
+ Employed
+ Self-employed
+ Worker
It is really important to know which of these 3 is your status in your workplace, to be able to pay the right taxes, and be able to understand what are your rights.
How do you know? It should say in your contract, if it doesn’t, you can check different criterias as well: who decides how the work is done, how regular the payment is, or who provides materials.
Please have a look at the self-employed section to see the definition of self-employment.
National Minimum Wage (NMW)
Most workers in the UK entitled to be paid at least NMW – an hourly rate, differs depending on the employee’s age. It changes each April.
Not entitled:
+ Volunteers
+ Self – employed
+ Students and others on work experience placements
+ Company directors
Non-family members living in the employer’s home who share in the work and leisure activities, are treated as one of the family and aren’t charged for meals or accommodation, for example au pairs.
Service charges, tips must be paid in addition to the NMW, not as a part of NMW. Employee should know how these will be paid e.g. cash at the end of a shift; weekly, divided between all the staff; monthly in their pay packet.
NMW
Contracts for payments below the minimum wage are not legally binding. The worker is still entitled to the National Minimum Wage or National Living Wage. It’s a criminal offence for employers to not pay someone the National Minimum Wage or National Living Wage, or to fake payment records.
Contract of employment
A contract is full terms and conditions of employment. A legally binding agreement between an employer and an employee which is formed when: an employee accepts the offer of employment in return for pay and both parties intend to create legal relations.
Verbal contracts are legal. Written statement of employment particulars is minimum. By law, employer must set out the main employment terms & conditions in a written statement (up to 2 months) and it should cover:
+ Name of employer and employee
+ Address of employe
+ Date employment will begin/ began
+ Job title / description
+ All pay details including pay dates and intervals of pay, bonus and overtime details, sick and holiday pay
+ Hours of work/ working time
+ Holiday entitlement
+ Job location
+ Details of any collective agreement that may affect employee’s conditions of employment
A contract doesn’t need to include:
+ Too obvious to mention (stealing)
+ Necessary to make the contract workable (driver – driving licence)
+ Customs, practice within organisation
+ Company policies and rules (handbook)
+ Statutory rights (SMP, SSP)
Self-employement
If you start working for yourself you’re self-employed – even if you haven’t yet told HM Revenue and Customs (HMRC). You’re probably self-employed if you:
+ run your business for yourself and take responsibility for its success or failure
+ have several customers at the same time can decide how, where and when you do your work
+ can hire other people at your own expense to help you or to do the work for you
+ provide tools
+ are responsible for finishing any unsatisfactory work in your own time charge an agreed fixed price for your work
HMRC says:
+ There is a low indication of substitution.
+ There is a high indication of control over the worker.
+ There is a high indication of financial risk.
The table below explains the difference between different types of work:
Types of work
Bogus (false) self – employment
Bogus self-employment is a situation when a person who should have an employee status is asked by employer to register as self-employed. False self-employment means that your employer won’t have to pay you National Minimum Wage, sick pay, holiday pay or maternity pay.
At the moment only Employment Tribunal can confirm the status as employee if e.g.:
+ you are required to work regularly unless you are on leave
+ you are paid hourly rate
+ you’re required to do a minimum number of hours
+ your manager decides when and how you work
+ you can’t send someone else to do your work
+ your employer provides the materials and equipment for your work.
Umbrella companies
If you work in the construction industry, chances are that you are employed by an umbrella company. This is not ideal as these companies have hidden fees and you might loose money.
How can you spot them:
+ Job is advertised with pay £12 per hour but workers are paid NMW (expenses, “performance related pay”)
+ Wage slips are confusing and hard to understand.
+ Holiday pay is included in the hourly rate
+ Most contracts are for zero hours
+ A fee of up to £30 a week is taken from the pay weekly to pay for the umbrella company’s services
+ The worker is required to pay both the employers’ and employees national insurance contributions (25% of eligible earnings)
The right to work of EU citizens in the UK will change after the UK exits the EU next year on 20 March 2019. Please find out more, by reading our Brexit guide here.