If our contract says they're self-employed, isn't that the end of it?

No. A contract label is one factor. If the person in practice works personally, under your control, as part of your team, a tribunal or HMRC can decide they are a worker or employee regardless of the wording.

Can someone be self-employed for tax but a worker for employment law?

Yes. The tests overlap but aren't identical, so a person can pay their own tax as self-employed and still be entitled to worker rights such as paid holiday and the minimum wage.

Does this apply across the UK?

The tax and IR35 rules apply UK-wide. The employment rights described here are for England, Wales and Scotland. Northern Ireland has its own employment legislation with similar definitions but some different rights.

Is my contractor actually an employee?

Updated 18 October 2026 · 3 min read · UK law

Short answer

Possibly. The label in the contract doesn't decide it: tribunals and HMRC look at how the relationship works in practice, especially whether the person must do the work personally, how much control you have and whether they are genuinely in business for themselves. If they are really a worker or employee, they are entitled to rights such as the minimum wage and paid holiday, and if they are an employee for tax you should be running them through PAYE.

Employee, worker or self-employed

Section 230 of the Employment Rights Act 1996 defines two of the three categories:

Employee: someone working under a contract of employment. Employees get the full set of rights, including statutory notice, statutory sick pay (from the first day of sickness since 6 April 2026), family leave, redundancy pay after two years and unfair dismissal protection (after two years, falling to six months for dismissals on or after 1 January 2027).
Worker: someone who agrees to do work personally and isn't treated as a client or customer of their own business. Workers get the minimum wage, paid holiday, rest breaks, the 48-hour average week limit, protection from unlawful deductions, discrimination and whistleblowing protection, and a written statement.
Self-employed: someone genuinely in business on their own account. They mainly get health and safety protection, some discrimination protection and whatever their contract says.

Every employee is also a worker. Someone you call a "contractor" can still be a worker or an employee in law.

How status is judged

There's no single test. A tribunal looks at the whole relationship, including:

Personal service: must they do the work themselves, or can they genuinely send a substitute (and do they)?
Control: do you decide how, when and where the work is done?
Obligation: are you expected to offer work and are they expected to accept it?
Integration: do they have a manager, a staff email, a uniform or a place on the rota?
Business risk: do they set their price, invoice, use their own equipment, work for other clients and bear the cost of fixing mistakes?

What the contract says matters, but if it doesn't match what actually happens, the reality wins.

Tax status is decided separately. HMRC may treat someone as self-employed for tax while they are a worker for employment rights. HMRC's check employment status for tax tool can help with the tax side.

What getting it wrong can cost

If someone you treat as self-employed is actually a worker or employee, you may face:

claims for unpaid holiday pay and minimum wage arrears, with minimum wage penalties of up to 200% of the arrears (maximum £20,000 per worker)
unpaid PAYE tax and National Insurance, including employer's contributions, plus interest and penalties from HMRC
employment tribunal claims, such as unfair dismissal or discrimination

From 1 October 2026 most tribunal claims can be brought within six months rather than three. Since 6 April 2026, employers must also keep holiday records for six years.

Contractors with their own company (IR35)

If the contractor works through their own limited company, the off-payroll working rules (IR35) ask whether they would be your employee for tax if you engaged them directly.

Medium or large private-sector clients must decide the contractor's status and give a status determination statement with reasons. If the contractor is inside the rules, whoever pays the contractor's company must deduct tax and National Insurance.
Small clients don't have to decide. The contractor's own company is responsible.

A private-sector company is medium or large if it meets two or more of: turnover over £10.2 million, balance sheet over £5.1 million, more than 50 employees. Clients that aren't companies use a turnover test only. Higher limits (£15 million turnover and £7.5 million balance sheet) apply to financial years starting on or after 6 April 2025, but HMRC says they will usually first make a difference from the 2027 to 2028 tax year.

IR35 is about tax only. It doesn't give the contractor employment rights.

Sources

General information about UK law, not legal advice. Your situation may change the answer. Ask Taylor about the details, or get a Sprintlaw lawyer to advise you.