> Disclaimer: SiteKiln gives you plain-English information, not legal or employment advice. Talk to a qualified professional before making big decisions.
The short version
You can't claim unfair dismissal if you're genuinely self-employed. But here's the thing -- a label on a contract doesn't make you self-employed. If you were told where to be, when to start, what to do, and couldn't send someone else in your place, a tribunal will likely say you were an employee. And if you were an employee, you can claim unfair dismissal -- regardless of what your "contract for services" says.
Why this matters in construction
Construction is riddled with arrangements where someone is called "self-employed" or a "subcontractor" but works exactly like an employee. Same site, same hours, same gaffer, same tools -- for months or years. Then one day they're told not to come back. No notice. No reason. No process.
They assume they've got no rights because the paperwork says "self-employed." That assumption is wrong.
Tribunals have repeatedly looked behind the contract and found employment where none was admitted. The case of Harris and Kearny v Excel Brickworks Ltd is a direct example -- two construction workers signed "self-employed contracts for services," were dismissed without notice, and the tribunal found they were employees entitled to unfair dismissal protection. The contract said they could refuse work, choose their own methods, and send substitutes. In reality, none of that ever happened.
The legal framework -- ss.94--98 ERA 1996
| Section | What it does |
|---|---|
| s.94 | Gives employees the right not to be unfairly dismissed |
| s.95 | Defines what counts as a "dismissal" (including constructive dismissal) |
| s.97 | Defines the "effective date of termination" -- when the clock starts |
| s.98 | Sets out the five potentially fair reasons for dismissal and the fairness test |
The five potentially fair reasons (s.98):
- Conduct -- misconduct, gross misconduct
- Capability -- can't do the job (skill, health)
- Redundancy -- role no longer exists
- Illegality -- continued employment would breach the law
- Some other substantial reason (SOSR) -- catch-all, but must be genuine
Even where a reason is potentially fair, the employer must show they acted reasonably in treating it as sufficient to dismiss. That means a fair process -- investigation, hearing, right of appeal. On a construction site, this almost never happens.
The qualifying period -- what's changing
| Current (until 31 Dec 2026) | From 1 January 2027 | |
|---|---|---|
| Qualifying period | 2 years' continuous service | 6 months' continuous service |
| Compensation cap | Lower of 52 weeks' pay or £118,223 | No cap -- based on actual financial loss |
| Automatically unfair dismissal | No qualifying period needed | No qualifying period needed |
This is a seismic shift. Under the ERA 2025, the qualifying period drops from two years to six months, and the compensation cap is removed entirely from 1 January 2027. For construction, where informal sackings are routine and people are "let go" without process, the financial exposure just got significantly larger.
Automatically unfair dismissal -- no qualifying period needed
Some reasons for dismissal are automatically unfair regardless of how long someone has worked. These include dismissal connected to:
- Pregnancy or maternity
- Whistleblowing (protected disclosure)
- Health and safety -- raising concerns or refusing to work in dangerous conditions (s.100 ERA 1996)
- Asserting a statutory right (e.g. asking for holiday pay, NMW, rest breaks)
- Trade union membership or activity
- Requesting flexible working
- Being a part-time or fixed-term worker
- Jury service
Construction-specific red flag: If someone raises a health and safety concern on site and gets told not to come back the next day -- that's a potential automatically unfair dismissal claim. No two-year (or six-month) qualifying period applies. And it doesn't matter what the contract calls them.
The status question -- why "self-employed" doesn't protect you
Unfair dismissal is a right reserved for employees. Genuinely self-employed people cannot bring a claim. But the critical question is: were they actually self-employed?
A tribunal will look at reality, not the paperwork. The key tests:
| Factor | Points toward employee | Points toward self-employed |
|---|---|---|
| Control | Told when/where/how to work | Decides own methods and hours |
| Personal service | Must do the work personally | Can send a substitute freely |
| Mutuality of obligation | Employer must offer work; worker must accept | No obligation either way |
| Equipment | Uses employer's tools/plant | Provides own tools at own cost |
| Financial risk | Paid by the hour/day regardless | Bears risk of profit and loss |
| Integration | Part of the team, wears uniform, has site ID | Comes in, does the job, leaves |
| Exclusivity | Only works for one company | Multiple clients |
In Enfield Technical Services Ltd v Payne, the Court of Appeal found that a worker treated as self-employed for tax purposes was in reality an employee -- and critically, the fact that HMRC had accepted the self-employed classification did not prevent the tribunal from finding otherwise.
What construction sites get wrong
-
"He signed a self-employed contract." Doesn't matter. The tribunal looks at the real working relationship, not the document.
-
"He was on CIS." CIS is a tax collection mechanism. It does not determine employment status for employment law purposes. Someone on CIS can still be an employee.
-
"He could refuse work." Could he, though? If refusing meant never getting called back, that's not a genuine right to refuse.
-
"He was paid gross." Tax treatment does not determine legal status. You can be paid gross and still be an employee in law.
-
"We just told him the job was finished." If he was an employee, that's a dismissal. Without a fair reason and fair process, it's an unfair dismissal.
-
"He hadn't been here two years." From January 2027, six months is enough. And for automatically unfair reasons, there's no qualifying period at all.
What happens if it goes wrong
For the worker who was "self-employed":
- If a tribunal finds they were an employee, they can claim unfair dismissal (provided qualifying period is met, or automatically unfair ground applies)
- Compensation from January 2027: uncapped, based on actual loss
- Can also claim backdated holiday pay, notice pay, pension contributions
- The fact they were incorrectly classified as self-employed does not automatically make the contract illegal or unenforceable -- the tribunal can still find employment existed
For the contractor/employer:
- Unfair dismissal compensation with no cap -- potentially tens of thousands for even mid-level operatives
- Backdated PAYE, NICs, holiday pay, pension auto-enrolment contributions
- HMRC investigation into wider workforce -- one successful claim often triggers a review of all similar arrangements
- Reputational damage, especially on public-sector or tier-one projects where compliance is monitored
- From January 2027, the six-month qualifying period means far more of your workforce is in scope
What to do
If you're a contractor running a site:
-
Don't rely on the contract label. If someone works like an employee, a tribunal will treat them as one -- regardless of what the paperwork says.
-
Have a dismissal process. Even for short-service employees. Investigation, meeting, right of appeal. Document everything. The ERA 2025 makes informal sackings far more expensive.
-
Know the automatically unfair grounds. Sacking someone after they raise a safety concern, ask for holiday pay, or report a problem is automatically unfair -- no qualifying period, no cap.
-
Audit your workforce now. Anyone who's been on site regularly for six months or more, working under your direction, using your tools -- they're probably an employee. Treat them accordingly.
-
Budget for the change. From 1 January 2027, the combination of six-month qualifying and uncapped compensation changes the risk calculation entirely.
If you're a worker told you're "self-employed":
-
Keep records. Hours, sites, instructions given, who supervised you, what tools you used, whether you ever actually sent a substitute or refused work.
-
Know your rights. If you were dismissed and you worked like an employee, you may have an unfair dismissal claim -- even if your contract says otherwise.
-
Act quickly. You have three months minus one day from the date of dismissal to file a claim at the employment tribunal. You must also go through ACAS Early Conciliation first.
-
Don't assume CIS means no rights. CIS is a tax mechanism. Employment status for employment rights is a separate legal question.
What to do next
- Write down exactly how your working arrangement operated: who controlled your hours, tools, methods, and whether you ever genuinely substituted or refused work.
- Keep records of everything -- hours, sites, instructions, supervisors, texts, emails. You'll need this as evidence.
- Act quickly -- you have three months minus one day from the date of dismissal to file a tribunal claim (contact ACAS first for Early Conciliation).
- Don't assume CIS means no rights -- CIS is a tax mechanism and does not determine your employment status for employment law purposes.
- If you were dismissed after raising a health and safety concern, that may be automatically unfair dismissal with no qualifying period needed.
Sources
- Employment Rights Act 1996, ss.94--98 (unfair dismissal provisions)
- Employment Rights Act 2025 -- six-month qualifying period and removal of compensation cap (commencing 1 January 2027)
- Harris and Kearny v Excel Brickworks Ltd -- ET finding construction workers on "self-employed" contracts were employees
- Enfield Technical Services Ltd v Payne; BF Components Ltd v Grace [2008] EWCA Civ 1085 -- Court of Appeal: self-employed tax status did not prevent unfair dismissal claims
- Herrington Carmichael -- Employment Rights Act 2025: Construction Sector Key Developments
- Bird & Bird -- Six Months for Protection, No Cap on Compensation
- Browne Jacobson -- Employment Rights Act 2025: Changes to Unfair Dismissal
- Ogletree Deakins -- UK Employment Rights Act 2025 Lifts Cap on Unfair Dismissal Compensation
- WS Law -- Removal of the Unfair Dismissal Compensation Cap
- Collyerbristow -- Status of Construction Industry Contractors Questioned by Tribunal Ruling
- Construction Management -- Tribunal Ruling Puts Contractors' Employment Status in Doubt
- Davidson Morris -- Automatically Unfair Dismissal 2026 Explained
- ACAS -- Self-employment and Employment Status
- GOV.UK -- An Update on the Employment Rights Bill
This guide is for information only. It is not legal, tax, or financial advice. Legislation, case law, and HMRC guidance change frequently. The ERA 2025 provisions on unfair dismissal qualifying periods and compensation caps commence on 1 January 2027 -- transitional arrangements may apply. Employment status is determined on a case-by-case basis and no single factor is conclusive. Always take professional advice specific to your circumstances before acting on anything in this guide. SiteKiln is not a law firm and accepts no liability for actions taken based on this content.
Know someone who needs this?
Was this guide useful?
Didn't find what you were looking for?
Spotted something wrong or out of date? Email us at hello@kilnguides.co.uk.
In crisis? Samaritans 116 123 ·