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Worker Classification

Determining whether a worker is an employee, worker, or independent contractor.

Full Definition

Worker classification is the legal determination of whether an individual performing work for an organization is an employee (with full employment rights), a worker (with some rights), or an independent contractor (self-employed, with no employment rights). Misclassification — treating employees as contractors — is a significant legal risk, resulting in back-payment of tax, NI, holiday pay, and penalties. In the UK, IR35 legislation targets off-payroll working arrangements. HR and legal teams must carefully assess each engagement to apply the correct classification.

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