A Guide to Employment Types

Understand the difference between the 3 main employment types in the UK

The rise of freelancing and app-based work marketplaces has created widespread confusion about the types of employment in the UK.

In response, the government-backed Taylor Review into modern employment practices has recommended some important changes to clarify and simplify the definitions of employment that exist in the modern world of work.

In this guide:

The Taylor Review's impact on employment types

The Taylor Review on modern employment practices is a government initiative to look at the impact of changing social, technology and economic forces on the world of work.

The review proposes a number of strategies and recommendations to help the UK create an environment where 'good work' can flourish. The full review looks at a number of topics, ranging from wellbeing, to learning and development, right through to the implications on tax and National Insurance.

You can read the full Taylor Review here - PDF, 3.75MB, 116 pages

A new employment type to protect Gig Workers

For any organisation looking to utilise the breadth and depth of skills available in the gig economy, a highlight from the review was the recommendation of a new employment type—the dependent contractor—in order to bring clarity and better reflect the new world of work.

"Determining whether you are an employee, a worker or genuinely self-employed requires the ability to understand complex legislation, which is spread over many Acts, and be aware of a mountain of case law. For individuals, not knowing your employment status means not knowing what employment rights you deserve. For businesses, this situation can lead to uncertainty about their responsibilities and what can be demanded from workers. The situation does not need to be this complicated."

"With that in mind, government should introduce a new name to refer to the category of people who are eligible for 'worker' rights but who are not employees. We recommend that the legislation refer to this group as 'dependent contractors'."

Overview guide to employment types

In the section below, we have distilled the current Gov.uk guide on Employment Status to give you an overview guide to understanding the three types of employment in the UK.



An employee is someone who works under an employment contract.


A manager or supervisor is responsible for their workload, saying when a piece of work should be finished and how it should be done.

The business provides the materials, tools and equipment for their job.

Personal service

The employee can't send someone else to do their work. They are required to do a minimum number of hours and expect to be paid for the time worked.

An employee works at the business' premises or at an address specified by the business.

Mutuality of Obligation

They only work for the business, or if they do have another job, it's completely different from their work for the business.

Self Employed


A person is self-employed if they run their business for themselves and take responsibility for its success or failure.

Self-employed workers aren't paid through PAYE and they don't have the employment rights and responsibilities of employees.


A self-employed person can decide what work they do and when, where and how to do it. They use their own money to provide tools and equipment for their work. Their 'employer' agrees a fixed price for their work - it doesn't depend on how long the job takes.

Personal service

They can hire someone else to do the work. They are also responsible for fixing unsatisfactory work in their own time.

Mutuality of Obligation

They can work for more than one client.

Dependent Contractor

Dependent Contractor

As the recommendations of the Taylor Review have yet to be implemented, this is a reference point only.

A person is a dependent contractor if they have a contract (not necessarily written) to do work or provide services personally for a reward.


The dependent contract has had to agree with the business' terms and conditions in order to get work.

They are under the supervision or control of a manager or director. The business can also deduct tax and National Insurance from their pay.

The business also provides materials, tools and equipment they need to do the work.

Personal service

They are not able to send someone else to do their work.

Mutuality of Obligation

The business doesn't have to offer them work, and they do not have to accept it. In other words, they can work when they want to.


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