Employment Status

Employment status defines the nature of the working relationship between an individual and their employer. It impacts rights, responsibilities, benefits, and the legal framework governing the employment relationship. Learn more about employment or work status here.

What is Employment Status?

Employment status refers to the classification of an individual's working relationship with their employer. It determines the legal rights and obligations of both parties, including entitlements to benefits, protections under labour laws, tax responsibilities, and the level of control and supervision an employer has over the worker.

Why is it Important to Clearly Define and Identify the Employment Status?

Clearly defining and identifying employment status is essential for several reasons:

• To comply with the law: Labour laws often outline the types of work statuses in the country. Based on these types, the law determines the responsibilities of each party. 
• To protect employee rights:  The work status determines an employee’s eligibility for benefits, protections, and compensation. Clearly identifying it helps employers provide the mandated benefits to employees. 
• To compute taxes correctly: Employment status affects tax obligations for both the employer and employee. Misidentifying an employee can result in errors that may then lead to fines. 
• To remain transparent: Work status provides a clear understanding of roles, responsibilities, and expectations.

Employment Status Types in Different Countries

Employment laws outline the types of employment status, hence, these types may vary from one country to another. Here are some examples: 

In the UK

In the United Kingdom, the following are the main types of employment status: 

Worker

Workers are individuals who provide services under a contract, whether written or oral. They have some employment rights, such as minimum wage, protection against unlawful deductions from wages, and statutory holiday pay, but do not enjoy the full range of rights given to employees.

Employee

Employees work under an employment contract and have extensive employment rights, including sick pay, parental leave, redundancy rights, and protection against unfair dismissal. Employees are typically subject to more employer control and supervision.

Self-Employed and Contractor

Self-employed individuals and contractors operate their own businesses and provide services to clients. They have no rights as employees or workers and are responsible for their own taxes and benefits.

Director

Directors are members of a company's board and have fiduciary duties to the company. They may also have employment contracts if they perform tasks that don’t fall under being a director.

Office Holder

Office holders hold a position created by statute, such as a company secretary or a judge. Their rights and responsibilities are defined by the office they hold rather than a contract of employment.

In Singapore

In Singapore, the Employment Act covers “all employees under a contract of service with an employer.” However, there are exceptions. Generally, employment status includes:

Full-time

Full-time employees work the standard number of hours (full-time hours) as defined by their employer, typically 40 per week. They are entitled to full employment benefits, including leave, medical benefits, and statutory protections.

Part-time

Part-time employees work fewer hours than full-time employees, usually under a set schedule. They receive prorated benefits based on their working hours and are protected by employment laws.

Temporary

Temporary employees are hired for a specific period or to complete a particular project. Their employment ends when the contract period expires or the project is completed. They may have limited benefits compared to full-time employees.

Contract

Contract employees are hired for a fixed term, often for specific projects or to cover for permanent employees. Their rights and benefits are outlined in their employment contract and can vary widely.

Learn more about the Employment Laws in Singapore here. 

In the Philippines

In the Philippines, below are the types of employment: 

Regular

Regular employees are those who have been employed for a continuous period and have passed the probationary period. They enjoy full benefits and protections under labour laws, including security of tenure.

Probationary

Probationary employees are on trial for a specific period, typically six months, during which their suitability for regular employment is assessed. They may be terminated more easily compared to regular employees.

Fixed-Term

Fixed-term employees are hired for a specific period or project. Their contract ends upon the completion of the term or project. They may have limited benefits compared to regular employees.

Seasonal

Seasonal employees work during peak periods or seasons when there is an increased demand for labour. Their employment is periodic and limited to the season in which they are needed.

Project

Project employees are hired to work on specific projects. Their employment is tied to the duration of the project and ends when the project is completed.

Learn more about Employment Laws in the Philippines here. 

What Employment Status is Best for Your Business?

Choosing the right employment status for your employees depends on the specific needs of your business. Consider factors such as the nature of the work, the duration of the employment, budget constraints, and the level of control required over the worker. 

For example, if the work needed to be done is continuous, it may be necessary to hire a regular employee. In contrast, work that only takes place every once in a while may only require a temporary or seasonal employee. 

Each employment status offers different benefits and obligations, so it’s essential to match these with your business goals and operational requirements.

Change in Employment Status: When Does it Happen, and What Should HR Consider?

Employment status can change due to various reasons, such as the end of a probationary period, the completion of a fixed-term contract, or a change in the nature of the work. HR should consider the following when managing changes in employment status:

• Legal Implications: Ensure compliance with labour laws and regulations.
• Communication: Clearly inform the employee about the change and its implications.
• Documentation: Update employment contracts and records to reflect the new status.
• Benefits and Compensation: Adjust benefits and compensation packages as needed.

Conclusion

Understanding employment status is fundamental to managing the workforce effectively and ensuring compliance with labour laws. By clearly defining and identifying employment status, businesses can provide appropriate benefits, protections, and expectations for their workers.

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