Employment status

What is an Employment status?

An employment status refers to the rights and protections that employees are entitled to at work. The employment status determines the responsibilities that an employer owes to the employee. Whenever an employer hires new personnel, it is up to them to decide what type of employment status they are hiring under. 

What are the types of Employment status?

There are three types of employment status:

1. Worker

The ‘worker’ is the most casual among the three types of employment status. A person can be described as a worker if:

• They have an arrangement to perform their services
• They have to show up for work even if they don’t want to
• They cannot subcontract their work out to other people
• They aren’t performing the work as a limited company

2. Employee

A person that falls under the “employee” employment status is one who works under a contract of employment. An employee is provided all the protections of a worker, but with additional employment rights and protections. A person is regarded as an employee if:

• They have a contract of employment
• They are generally required to work regularly unless they are on some type of leave
• They receive paid holiday
• They are subject to redundancy procedures
• They are also required to work a minimum number of hours and can’t subcontract another to do their work for them. 

3. Self-employed

A self-employed person runs their own business for themselves and are singularly responsible for its success. Unlike employees that enjoy employment rights, the self-employed are not protected by similar safeguards. A person is considered to be self-employed if:

• They don’t get a holiday or sick pay when they are not working
• They give out ‘quotes’ for their work
• They submit invoices once their work is done
• They have a contract with their client which will determine their obligations and the payment that they receive for that work. 
  

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Is determining employment status important?

The employment status an employer chooses will determine their relationship with their employee. They must choose one that will best describe the manner in which they are going to work together. 

Choosing the wrong type of employment status may lead to problems further in the future. For instance, if a small business offers more employment security than it can afford, the business may find itself with fewer hands at critical moments because employers won’t be able to rely on the team when they need them. 

Employment Status in Different Countries

Employment Status in India

As per the latest CMIE Report, urban unemployment in India decreased to 7.93% in February from 8.55% in the previous month, while rural unemployment rose to 7.23% from 6.48%. The overall unemployment rate increased from 7.14% in January to 7.45% in February. Factors such as rapid population growth and slower economic expansion contribute to high unemployment rates. The Indian government has launched skill development programs and provided incentives for businesses, but further investment in education and infrastructure is needed.

Employment Types:

• Contract Employee: Specific terms for a set period.
• Full-Time Employee: 40+ hours/week with benefits.
• Independent Contractor: Task or project-based.
• Intern/Apprentice: Gaining work experience.
• Part-Time Employee: Fewer hours, often without benefits.
• Self-Employed: Operates own business.
• Temporary/Seasonal Employee: Short-term needs in sectors like agriculture.
• Unemployed: Actively seeking employment.
• Volunteer: Unpaid work for social causes.

Employment Status in the US

Unemployment in North America has surged more than during the 2008 financial crisis. The policy approach in the US and Canada centered on unemployment benefits for laid-off workers, unlike European countries that introduced employment retention schemes. The Federal Reserve's efforts to combat inflation by raising interest rates may lead to slower economic growth and job losses, though the labor market remains tight with strong demand in many industries.

Employment Types:

• Contract Employee: Predefined period with specific terms.
• Full-Time Employee: 40+ hours/week with benefits.
• Independent Contractor: Contract-based, non-employee.
• Intern/Apprentice: Temporary for educational benefit.
• Part-Time Employee: Less than 40 hours/week.
• Self-Employed: Individual is own employer.
• Temporary/Seasonal Employee: Short-term with set dates.
• Unemployed: Actively seeking work.
• Volunteer: Unpaid labor.

Employment Status in Arab Countries

The pandemic and the decline in oil prices significantly impacted the Arab States, with GDP contracting by 6.0% in 2020. In GCC countries, the employment-to-population ratio (EPR) fell by 1.2 percentage points, leading many workers to unemployment. Efforts to diversify economies and reduce dependence on oil are ongoing to stabilize employment rates.

Employment Types:

• Contract Employee: Project-based, especially in construction and oil.
• Full-Time Employee: Common in government and corporates with benefits.
• Independent Contractor: Service provision on contract basis.
• Intern/Apprentice: Structured experience programs.
• Part-Time Employee: Less common, seen in retail/hospitality.
• Self-Employed: Small business owners, freelancers.
• Temporary/Seasonal Employee: In tourism, agriculture.
• Unemployed: High youth unemployment due to economic shifts.
• Volunteer: Community service, charity work.

Employment Status in Africa

Africa experienced a reversal in poverty reduction progress due to the pandemic, with the region's GDP declining by 1.9% in 2020. The impact varied across subregions and country groups, influenced by structural characteristics. Major decent work deficits and economic challenges highlight the need for targeted interventions to support employment and economic growth.

Employment Types:

• Contract Employee: Formal sectors like mining and services.
• Full-Time Employee: Government and corporate jobs with benefits.
• Independent Contractor: Common in informal economies.
• Intern/Apprentice: Skill development programs.
• Part-Time Employee: Urban retail and services.
• Self-Employed: High rates in agriculture and small businesses.
• Temporary/Seasonal Employee: Predominantly in agriculture/tourism.
• Unemployed: Significant youth unemployment.
• Volunteer: Active in NGOs and community projects

What employment status should you hire for your business?

Before an employer selects the right employment status for its new hire, they first need to determine the kind of work they need them to do. The different types of employment status provide different offerings to employers. And the different statuses also creates a varied dynamic between employer and employee. 

• The ‘worker’ employment status is a very flexible one. An employer cannot coerce the worker into accepting any they are offered, but neither are they obliged to offer the employment protections of a fully-regarded employee. 
• The ‘employee’ employment status offers more stability. The contract offers a security to the employer that they can rely on the employee in fulfilling their duties. But, they need to offer this in exchange for a more secure employment package for the employee. 
• The ‘self-employed’ employment status offers the employee the most freedom and flexibility, but they aren’t protected by any employment rights. They would be a great option for companies that require help on a single project. 

FAQ's

How to Check My Employment Status

You can check your employment status by reviewing your contract, pay slips, and any correspondence from your employer. Additionally, you can contact your HR department or use online government resources to confirm your employment status.

Why is Employment Status Important?

Employment status is important because it determines your rights and responsibilities at work. It affects your entitlement to benefits, job security, and protections under employment law.

What is Proof of Status of Work?

Proof of status of work can include documents like employment contracts, pay slips, tax forms, and letters from your employer confirming your job role and dates of employment.

Does a Pay Slip Count as Proof of Employment?

Yes, a pay slip can count as proof of employment. It shows that you have received wages from an employer, which can help verify your job status and income.

What is the Legal Difference Between Employee and Worker?

The legal difference between an employee and a worker lies in their rights and obligations. Employees generally have more rights, including protection against unfair dismissal, entitlement to statutory sick pay, and maternity leave. Workers have fewer rights but are still entitled to basic protections like minimum wage and holiday pay.

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