HM Revenue and Customs commissioned the National Centre for Social Research (NatCen) to carry out independent research on employment statuses from the perspective of employment rights.
They surveyed 8,767 UK adults, aged 18 to 64, in May and June 2023 through online and telephone surveys and fieldwork.
What Is Employment Status?
In this context, a person’s employment status relates to how employment rights and entitlements are determined. Employment status for tax purposes is a separate legal system—and both are equally complex.
Key Findings from the Research
As of April 2023, 80% of UK adults aged 18 to 64 were in some form of paid work, broken down as follows:
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57% were categorised as the “assigned status workforce”, meaning their employment status was either ‘employee’ or ‘worker’ (also known as limb (a) and limb (b) workers).
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This equated to between 25.9 and 27.2 million individuals.
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Of these, around 20.6 to 22.0 million were employees.
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4.8 to 5.7 million were most likely ‘workers’ rather than self-employed.
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24% were in the “unassigned status workforce”, meaning their employment status couldn’t be determined.
These individuals were more likely to:
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Be aged 18–24
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Be from an ethnic minority background (Black or Asian)
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Have multiple jobs
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Work part-time or be in education
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Be less likely to hold managerial or professional roles
Employment Rights and Paid Annual Leave
The study found that individuals highly or fairly likely to be workers were:
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Receiving holiday pay in line with statutory rights
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Having Income Tax and National Insurance deducted through PAYE
This suggests alignment with correct employment rights and tax obligations for their employment status.
Determining Worker Status in the Unassigned Group
The study assessed worker status based on four key features of a working relationship:
1. Control
Extent to which an engager decides how, when, and where work is done.
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39% showed a positive association
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53% were undetermined
2. Enterprise
The individual’s ability to make a profit or risk a loss. Low enterprise = more likely to be a worker.
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51% showed characteristics of low enterprise
3. Integration
Degree of involvement in the business.
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60% showed positive association with integration
4. Personal Service
Whether the work must be done personally.
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45% showed positive association
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53% were undetermined
Employment Status Breakdown for the Unassigned Group
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9% were highly likely to be workers (meeting all four criteria)
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46% were fairly likely to be workers
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38% remained undetermined
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6% were likely self-employed
Conclusion and Recommendations for Small Businesses
Although many individuals appear correctly aligned with their employment rights and tax obligations, the research highlights a sizeable minority who may not be receiving the correct protections. This reinforces the complexity and potential for misunderstandings regarding worker classification.
