L/600/9037 1.1/1.2/1.3 Produce a report showing the main types of employment status within the creative media sector

Task 1 – L/600/9037 1.1/1.2/1.3

Produce a report showing the main types of employment status within the creative media sector: (Employee, worker(contract), self employed.

Worker

A Worker will have a contract to undertake work or services for a reward, generally money. Their employer is required to provide them with work for the duration of the contract. They can’t work as part of their own company in an arrangement where their employer is in fact a customer. A Worker has to adhere to the hours of their contract even if they do not wish to.

Generally, the contract between the employer and the Worker will include terms such as “casual”, “as required” or “0 Hours” and often the Worker will be employed by an agency to undertake work for another company.

Workers are entitled to certain employment rights, which are:

  • National Minimum Wage
  • Protection against unlawful deductions from wages
  • Statutory minimum level of paid holiday
  • Statutory minimum length of rest breaks
  • To not work more than 48 hours/week on average, though they can waive this right.
  • Protection against unlawful discrimination
  • Protection from “Whistleblowing”
  • To not be treated less favourably if working part-time

There are further rights available if you are an Agency Worker

  • Statutory Sick Pay
  • Equal Treatment – the same rights to access and use facilities and services available to permanent colleagues
  • After 12 weeks
    • Equal Pay – the same pay as a permanent colleague would receive doing the job
    • Automatic Pension Enrolment
    • Paid annual leave

It is the duty of the employer to deduct tax and National Insurance contributions from their wages. The employer is also required to provide materials/equipment necessary to undertake the contracted work.

 

Employee

An Employee will be someone who work under an employment contract. Their employer, a business or organization, will provide a contract highlighting the employment conditions, their rights, responsibilities and duties. An employee has to stick to the terms of the contract until it finished or an agreed change is made.

Employees are entitled to all the right a Worker has, plus

  • Statutory Sick Pay
  • Statutory Maternity/Paternity/Adoption/Shared Parental pay and leave
  • Minimum Notice Period
  • Protection against unfair dismissal
  • Right to request flexible working – flexible start/end times, working from home etc
  • Time off for emergencies
  • Statutory Redundancy pay

Some of the rights listed require the employee to work for a minimum period before qualifying for them, this information would be outlined in their contract of employment.

As an employee, it is the duty of the employer to deduct tax and National Insurance contributions from their wages. The employer is also required to provide materials/equipment necessary to undertake the contracted work.

 

Self-Employed

A Self-Employed individual will run their business for themselves and hold responsibility for its success or failure. There are different business structures a self-employed individual can follow.

  • Sole Trader – This is the default structure one follows when becoming self-employed. As a sole-trader you are entitled to all profits (after tax) you make. You are able to employ staff, sole-trader refers to the fact that you are responsible for the company. It is your duty to send a self-assessment tax return in annually, pay income tax on profits, pay national insurance and, if the expected takings are to be over £83,000/year, register for VAT.
  • “Ordinary” Business Partnership – You and your business partner{s) share responsibility for the company. Profits are shared amongst partners as well as any losses the company makes. A partner doesn’t need to be an actual person but a “legal person”, such as a limited company. A nominated partner is required to submit a partnership self-assessment tax return annually, and each partner is also required to submit a self-assessment tax return annually, as well as pay income tax on their share of profits and pay national insurance.
  • Limited Partnership/Limited Liability Partnership – Similar to a business partnership bar the fact that partners can be excluded from the liability of the company. In the instance that the company has debts, general partners can be liable for the total amount, whereas, limited partners are only liable up to the amount they have invested. This type of business structure hold the same tax responsibilities as a Business Partnership.
  • Limited Company – An individual can set up a limited company, which excludes them personally from any liability as the company is responsible for itself. However, if one sets up a Limited Company they are not viewed as self-employed, rather as an employee of the company as well as an owner. Profits earned by a Limited Company are subject to corporation tax, after which it is owned by the company and can be shared.

Being self-employed means that you are your own boss, you can dictate the working conditions you have and don’t need to adhere to the rights workers or employees have.

 

Contractor

Contractors can be self-employed individuals or workers/employees working for a client by employed by an agency. The client hiring the contractors is not responsible for the tax of national insurance contributions for the contractor, that is the duty either for themselves (if self-employed) or their employer (if employed by an agency). Contractors aren’t necessarily entitled to the same rights as a worker, though things like health and safety still apply.

There are different benefits and in turn drawbacks to the different employment types. For example, being self-employed offers the freedom to work when you want on the projects you want. However, the amount of work you get is your own responsibility, there isn’t as much job security as there would be being an employee. As an employee you have your contract of employment, giving you the knowledge that you have work for the duration of the contract (and even if the contract is ended early, there is a required minimum notice period) and will be paid for that time. You don’t have as much freedom as a self employed individual, though you have the right to request flexible working but that can only flex so far. A worker has benefits similar to a self-employed individual, such as the ability to choose when they will work (that is outside of any contacted work), and whilst in a contract for work has some job security during the contracts length.

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