In the UK, your employment rights and tax responsibilities depend on your employment status. Some of them, such as protection for discrimination, are available to everyone. Others, such as National Minimum Wage, are only available to workers and employees. Once you have determined your status, have a look at the table below to understand what you are entitled to by law.
Remember that this table is a simplification, and additional criteria may apply for each individual right. For example, while all workers and employees have a right to maternity pay in principle, in practice it is only if working for 26 continuous weeks for the same employer, before the 5th month of pregnancy.
We recommend you use this for an overview of the social protection provided by each employment status. Contact us or ACAS for details of each right.
| Employment Rights | Employment Status | ||
|---|---|---|---|
| Employee | Worker Agency, Zero-hours, Casual |
Self-employed | |
| Protection from discrimination | ✔ | ✔ | ✔ |
| Safe working environment | ✔ | ✔ | ✔ |
| National Minimum Wage or above. From April 2024 this is £11.44 (age 21+), £8.60 (18 to 20) | ✔ | ✔ | |
| Contract and itemised payslips | ✔ | ✔ | |
| Protection from unlawful deductions of wages | ✔ | ✔ | |
| Rest breaks | ✔ | ✔ | |
| Paid annual leave | ✔ | ✔ | |
| Protection from unfair dismissal (after two years of continuous service) | ✔ | ||
| Statutory sick pay | ✔ | ||
| Maternity / paternity pay | ✔ | ✔ | |
| Maternity / paternity leave | ✔ | ||
| Redundancy pay | ✔ | ||
| Tax Responsibilities | Employee | Worker | Self-emp. |
| Income Tax and NI contributions paid for you by your employer | ✔ | ✔ | |
| Have to pay your own Income Tax and NI contributions | ✔ | ||
Everyone who works in the UK has the responsibility to pay income tax and National Insurance contributions. Workers and employees have these deducted by their employers. This is generally evidenced by a payslip that details gross income (before tax), net income (after tax), and the particular deductions.
The self-employed have a duty to declare their earnings and pay tax directly to the HMRC at the end of the fiscal year. This self-assessment can be done personally, or with the help of an accountant. Whatever the case, it is important to keep written records of all earnings and expenses throughout the year, to avoid being fined for paying incorrect tax.
The black market refers to a type of work for which no income tax and National Insurance contributions are paid. This is often due to deliberate tax evasion, such as when a self-employed individual hides income by not declaring it to the HMRC, or when an employer refuses to pay tax in the name of staff.
But it can also be due to negligence, such as when individuals are not aware of their tax responsibilities, or deceit. Numerous workers think they are employed legally, and that tax is paid for them, when in reality employers never declare their presence to the HMRC.
You can be a knowing perpetrator of the black market, as well as a victim operating in it without knowing. Whatever your role, it is important to understand the risks you are exposed to, and the ways to get out.
Losing access to a pension
State pensions are only available to individuals who have paid National Insurance contributions for a minimum of 30 years. Even after years of work, without a track record of paying NI you will lose your access to state pensions.
Losing access to benefits
Access to many social benefits in the UK, such as Employment and Support allowance, is conditioned upon paying National Insurance contributions. Even after years of work, without a track record of paying NI you will have no access to these benefits.
EU nationals: administrative removal
While, for as long as the UK is a member of the European Economic Area, all EU nationals have a right to enter and reside in the UK for 3 months, after the first 3 months the right of residence is subject to exercising an EU treaty right. This means being either: a student, a self-sufficient individual with comprehensive health insurance, a worker, or a self-employed individual.
As an EU national, even if you are earning and not claiming any social assistance in the UK, without proof of income tax and National Insurance contributions you are unable to prove that you are exercising a treaty right. If intercepted by the British Home Office, you risk being administratively removed, and receiving a re-entry ban.
Fines
If you are found to have deliberately not paid tax, the HMRC can fine you or deduct the payment directly from your bank account. Should you be unable to cover the costs of fines, the HMRC has the authority to send bailiffs that will collect your possessions instead.
| How to stay out of the black market | Worker or Employee | Self-Employed |
|---|---|---|
| Get a National Insurance Number | ✔ | ✔ |
| Demand payslips | ✔ | |
| Demand a written contract | ✔ | |
| Get a UTR from the HMRC | ✔ | |
| Keep written records of business expenses | ✔ | |
| Provide written invoices | ✔ | |
| Tax responsibilities | Worker or Employee | Self-Employed |
| Have tax and National Insurance contributions deducted by the employer | ✔ | |
| Declare earnings and pay tax and NI contributions to the HMRC, personally or with the help of an accountant | ✔ |