Am I Employed or Self-Employed? The Test That Decides

‍‌​‌‌‌‌‌‌​‌‌​‌‌‌​‌‌​‌‌‌​‌​​‌‌‌​‌​‍> Disclaimer: SiteKiln gives you plain-English information, not legal or employment advice. Talk to a qualified professional before making big decisions.

The short version

If someone controls where you work, when you work, how you do the work, tells you what to wear, and you can't send someone else in your place -- you're probably not self-employed, no matter what the paperwork says. The law looks at what actually happens, not what the contract calls you.

Why this matters to you

Construction has the highest rate of false self-employment of any sector in the UK. Research by Professor Mark Harvey at the University of Essex estimated between 375,000 and 425,000 construction workers were bogusly self-employed, with UCATT's own analysis putting the figure at over 50% of the industry workforce. Those numbers have been cited by unions, academics and government consultations for years, and there is no serious evidence the problem has shrunk.

Why do companies do it? Because calling you self-employed saves them employer's National Insurance (13.8% of your eligible earnings), holiday pay, sick pay, pension contributions, redundancy pay, and unfair dismissal liability. It's cheaper. You carry all the risk. They keep all the flexibility.

The Employment Rights Act 2025 received Royal Assent on 18 December 2025. It strengthens scrutiny of employment status, particularly for labour-only subcontractors, CIS operatives and long-term site-based workers. However, most of its provisions are being phased in through secondary legislation -- the government's updated roadmap (3 February 2026) uses common commencement dates of 6 April and 1 October, with the first major changes taking effect from 6 April 2026 and unfair dismissal reforms (qualifying period cut to six months, compensatory cap removed) confirmed for January 2027. The employment status provisions are still awaiting specific commencement orders, but the direction of travel is clear: companies misclassifying workers face growing exposure to backdated claims for holiday pay, sick pay and pension contributions once the relevant measures come into force.

The legal test: Ready Mixed Concrete (1968)

This is the case that still sets the framework. Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497 established a three-part test for deciding whether someone is an employee:

1. You do work in exchange for pay.

Straightforward. You turn up, you graft, they pay you. This leg is almost always met.

2. There is sufficient control over how you do the work.

Not just what you do -- how you do it. If the company tells you your start time, your finish time, where to be, what methods to use, what PPE to wear, and you can't really say no -- that points to employment. The question the court asks is whether the employer has the right to control the manner of work, even if in practice they don't exercise it every day.

3. The other terms of the arrangement are consistent with employment.

This is the catch-all. Courts look at things like: who owns the tools and equipment, who carries the financial risk, whether you're integrated into the business, and whether there's a genuine opportunity for you to profit or lose from the arrangement. In the original case, the driver owned his own vehicle, bore maintenance costs and financial risk -- that pointed away from employment.

All three legs have to be met for a contract of employment to exist. But tribunals look at the overall picture, not just one factor.

Supervision, direction and control -- the HMRC angle

From 6 April 2014, the false self-employment legislation put specific rules on agencies and intermediaries. HMRC's starting position is that supervision, direction and control is present -- and the agency has to prove it isn't.

If any element of supervision, direction or control exists over how you do the work (not just what the job is), the agency must deduct income tax and NICs at source as if you were an employee.

The key distinction: the client telling you which wall to plaster is fine. The client telling you how to plaster it, when to start, when to stop, and standing over you while you do it -- that's control.

The substitution question

Can you send someone else to do the work in your place -- genuinely, not just on paper?

If yes, and you actually do it sometimes, that strongly suggests self-employment. If the contract says you can but in reality you'd get binned off site for trying, the contract doesn't reflect the real deal -- and the law will look at reality, not the paperwork.

This was nailed down in Autoclenz Ltd v Belcher [2011] UKSC 41. The Supreme Court found that 20 car valeters had contracts calling them "sub-contractors" with substitution clauses -- but in practice they turned up personally every day, were controlled by the company, had no say over hours or deductions, and couldn't realistically send anyone else. The court said the written terms didn't reflect the true agreement and the real relationship was employment.

That principle applies directly to construction. If your "self-employed subcontract" says you can substitute but the site won't let anyone through the gate without a specific induction in your name, the substitution clause is worth nothing.

The signs you might be bogusly self-employed

Write these down. If several of these are true, your "self-employment" may not be genuine:

• You're told what time to start and finish, and you can't choose your own hours.
• You can't turn down work once you're "on".
• You can't send someone else in your place -- or you'd be dropped if you tried.
• You use their tools, their van, their materials.
• You work for one company, on their sites, most or all of the time.
• You're paid a day rate or hourly rate, not a price for a job.
• You don't invoice -- they just put you through CIS or pay you weekly.
• You wear their uniform or branded PPE.
• You're on their induction, their site, their supervision -- same as the PAYE lads next to you doing the same work.
• You have no realistic chance of profit or loss beyond turning up or not.
• You didn't negotiate the terms. They handed you a "subcontract" and said sign it or don't come back.

None of these on their own is decisive. But stack five or six together and you're looking at employment dressed up as self-employment.

What you're missing out on if you're bogusly self-employed

If you should legally be an employee or worker, you're entitled to rights you're currently not getting:

• Paid holiday -- 5.6 weeks pro-rata. That's money you're not seeing.
• Statutory sick pay -- if you meet the rules.
• National Minimum Wage protection -- your day rate might look decent until you work out the actual hours.
• Auto-enrolment pension contributions -- your employer should be paying in.
• Statutory notice -- not just "don't come back Monday".
• Protection from unfair dismissal -- after the qualifying period.
• Redundancy pay -- if applicable.

What happens to the company if they get caught

This isn't just your problem. Companies that misclassify workers are exposed to serious financial consequences:

• Backdated PAYE and NICs. HMRC can raise Regulation 80 Determinations for unpaid tax and Section 8 Decisions for unpaid National Insurance contributions -- going back years, not months. According to HMRC's own guidance, they should approach the engager first, not you.

• Employer's NI at 13.8% on every payment that should have been treated as employment income. On a workforce of 20 subbies over several years, that adds up fast.

• Backdated holiday pay, sick pay and pension contributions if workers bring tribunal claims. These can be substantial and are increasingly being pursued.

• Penalties and interest on top of the unpaid tax and NICs.

• Tribunal payouts if workers claim unfair dismissal, failure to provide statutory notice, or unlawful deduction from wages.

UCATT estimated false self-employment was costing the Exchequer £1.9 billion a year in lost revenue -- from construction alone. The Employment Rights Act 2025 and the new Fair Work Agency (launching 7 April 2026) are designed to tighten enforcement. Companies that have been running this model for years are starting to get burned, and the direction of travel is only going one way.

"But my contract says I'm self-employed"

Doesn't matter. The law has been clear on this for decades. Courts and tribunals look at the reality of the arrangement, not the label on the paperwork. If you walk like an employee, work like an employee, and get controlled like an employee -- the contract calling you a "subcontractor" won't save the company.

Autoclenz confirmed that written terms can be overridden where they don't reflect what actually happens. A tribunal will look at what you actually do day to day.

"But I'm on CIS"

Being registered under CIS does not determine your employment status. CIS is a tax collection mechanism. It doesn't give you rights and it doesn't take them away. You can be on CIS and still be an employee or worker in law. The two questions -- "how is tax collected?" and "what is the true employment relationship?" -- are separate.

What to do if you think you're bogusly self-employed

• Write down how it actually works. Not what the contract says. Who controls your day? Can you genuinely substitute? Do you carry any real financial risk? Do you work for anyone else?

• Check your answers against the tests above. If most of the "signs" list rings true, you've got a case worth exploring.

• Talk to ACAS first. Free, confidential, and they deal with this regularly. They can tell you where you likely stand before you spend a penny. Call 0300 123 1100 or use their online early conciliation service.

• Consider your union. If you're a member of Unite or another union, they have specific experience with bogus self-employment in construction and can support a claim.

• Don't kick off on site before you've taken advice. If you challenge your status and it goes wrong, you want a paper trail and professional backing, not a row in the car park.

• Know the time limits. Employment tribunal claims generally need to be brought within three months less one day of the act you're complaining about. Don't sit on it.

Before you say yes to a job, ask these 5 questions

Screenshot this. Keep it on your phone.

1. Can I send someone else to do this work if I can't make it?

If the answer is no -- or "technically yes but they'd never allow it" -- that's a control flag.

2. Am I choosing how I do the work, or are they telling me?

There's a difference between "plaster that wall" and "plaster that wall this way, at this time, with these materials, under our supervision." The first is a brief. The second is management.

3. Do I set my own hours, or do they tell me when to be there and when to leave?

If you're 7 till 4 like the rest of their lads and you didn't choose that -- note it.

4. Am I working for other people at the same time, or just them?

Genuinely self-employed people usually have multiple clients. If all your income comes from one company, week in week out, ask yourself why that looks different from employment.

5. What happens if I say no to a job they give me?

If you can turn work down without consequences -- that's self-employment. If saying no means you're off site and not coming back -- that's a relationship where they hold the power, not you.

If you answered most of these the wrong way round, it doesn't mean you have to do anything about it right now. But it means you should know where you stand, because one day -- when they drop you with no notice, no holiday pay and no redundancy -- it'll matter.

What to do next

• Write down how your working arrangement actually operates day to day -- who controls your hours, tools, methods, and whether you can genuinely substitute.
• Run through the "signs" checklist in this guide and count how many apply to you.
• Call ACAS on 0300 123 1100 for a free, confidential chat about where you stand before taking any action on site.
• If you're in a union, contact them -- Unite and GMB both have experience with bogus self-employment cases in construction.
• Keep copies of your contract, payslips, CIS statements, and any texts or emails about how your work is managed.

Sources

• Employment Rights Act 1996, s.230 -- definitions of employee and worker
• Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497
• Autoclenz Ltd v Belcher [2011] UKSC 41
• Employment Rights Act 2025 (Royal Assent 18 December 2025; provisions phasing in via secondary legislation through 2026--2027)
• Income Tax (Earnings and Pensions) Act 2003, s.44--47 (agency legislation, as amended 6 April 2014)
• Professor Mark Harvey, University of Essex -- false self-employment in UK construction (2008)
• UCATT, The Great Payroll Scandal -- false self-employment estimates and fiscal impact
• ACAS guidance on employment status and self-employment
• HMRC Employment Status Manual ESM7030

This guide is for information only. It is not legal advice. If you need advice on your specific situation, speak to ACAS, a union, or a solicitor who deals with employment law. Do not use this page as a legal defence.

Frequently asked questions

Am I employed or self-employed?

It depends on the reality of your working arrangement, not what anyone calls it. HMRC and employment tribunals look at factors like: do you control when and how you work? Can you send a substitute? Do you provide your own tools? Do you work for multiple clients? Are you taking financial risk? If someone tells you where to be, when to start, and exactly how to do the job, you're probably employed -- even if they call you self-employed.

Use HMRC's free Check Employment Status for Tax (CEST) tool at gov.uk to get an indication. But be aware that getting it wrong has serious consequences -- HMRC can go back up to 6 years (or 20 if they suspect fraud) and demand unpaid tax, NI and penalties from both you and the engager.

What is the IR35 test?

IR35 refers to the Intermediaries Legislation (now in Chapter 8 of ITEPA 2003) that catches workers who operate through a limited company but would be employees if they contracted directly. The test looks at the same employment status factors: control, substitution, mutuality of obligation, financial risk and integration.

For construction workers, IR35 mainly affects those working through their own limited company (PSC). Since the off-payroll working rules changed in April 2021, medium and large companies must assess your IR35 status and deduct tax if they decide you're inside IR35. Small companies are exempt -- the contractor still decides their own status.

Can HMRC change my employment status?

Yes. HMRC can investigate and reclassify you as employed, even if you've been working as self-employed for years. If they decide the reality of your working arrangements is employment, they can issue determinations going back up to 6 years (Section 8 of the Social Security Contributions (Transfer of Functions) Act 1999) and demand the unpaid tax and National Insurance.

The engager (the company paying you) is usually on the hook for employer's NI, and you'll owe the difference in income tax. HMRC has been actively targeting construction for status compliance. If your only "self-employment" involves one client, set hours, and no right to send someone else in your place, you're vulnerable.

What are the benefits of being self-employed in construction?

Genuine self-employment gives you control over your work, the ability to work for multiple clients, and the opportunity to set your own rates. You can claim legitimate business expenses against tax -- tools, materials, van costs, insurance, phone, accountancy fees -- which employed workers can't. You also have more flexibility over when and where you work.

The trade-off is no holiday pay, no sick pay, no employer pension contributions, no unfair dismissal protection, and no redundancy pay. You carry the financial risk if a job goes wrong or a customer doesn't pay. For many experienced tradespeople, the higher earning potential and freedom are worth it -- but make sure you're genuinely self-employed, not just labelled that way to save someone else money.

Frequently asked questions

Am I employed or self-employed?

It depends on the reality of your working arrangement, not what anyone calls it. HMRC and employment tribunals look at factors like: do you control when and how you work? Can you send a substitute? Do you provide your own tools? Do you work for multiple clients? Are you taking financial risk? If someone tells you where to be, when to start, and exactly how to do the job, you're probably employed -- even if they call you self-employed.

Use HMRC's free Check Employment Status for Tax (CEST) tool at gov.uk to get an indication. But be aware that getting it wrong has serious consequences -- HMRC can go back up to 6 years (or 20 if they suspect fraud) and demand unpaid tax, NI and penalties from both you and the engager.

What is the IR35 test?

IR35 refers to the Intermediaries Legislation (now in Chapter 8 of ITEPA 2003) that catches workers who operate through a limited company but would be employees if they contracted directly. The test looks at the same employment status factors: control, substitution, mutuality of obligation, financial risk and integration.

For construction workers, IR35 mainly affects those working through their own limited company (PSC). Since the off-payroll working rules changed in April 2021, medium and large companies must assess your IR35 status and deduct tax if they decide you're inside IR35. Small companies are exempt -- the contractor still decides their own status.

Can HMRC change my employment status?

Yes. HMRC can investigate and reclassify you as employed, even if you've been working as self-employed for years. If they decide the reality of your working arrangements is employment, they can issue determinations going back up to 6 years (Section 8 of the Social Security Contributions (Transfer of Functions) Act 1999) and demand the unpaid tax and National Insurance.

The engager (the company paying you) is usually on the hook for employer's NI, and you'll owe the difference in income tax. HMRC has been actively targeting construction for status compliance. If your only "self-employment" involves one client, set hours, and no right to send someone else in your place, you're vulnerable.

What are the benefits of being self-employed in construction?

Genuine self-employment gives you control over your work, the ability to work for multiple clients, and the opportunity to set your own rates. You can claim legitimate business expenses against tax -- tools, materials, van costs, insurance, phone, accountancy fees -- which employed workers can't. You also have more flexibility over when and where you work.

The trade-off is no holiday pay, no sick pay, no employer pension contributions, no unfair dismissal protection, and no redundancy pay. You carry the financial risk if a job goes wrong or a customer doesn't pay. For many experienced tradespeople, the higher earning potential and freedom are worth it -- but make sure you're genuinely self-employed, not just labelled that way to save someone else money.

How this site is funded →

Spotted something wrong or out of date? Email us at hello@kilnguides.co.uk.

In crisis? Samaritans 116 123 · Mental health support

How this site is funded →