Employment Act and the Control, Integration and Economic Reality Test

Employees (contract of service) enjoy protections such as paid holiday, sick pay, maternity/paternity leave, minimum wage, protection against unfair dismissal, and redundancy pay.

Independent contractors (contract for services) generally have none of these, but they gain flexibility, the ability to work for multiple clients, and potential tax advantages (though often with higher administrative burdens).

Misclassification can be expensive: backdated employment rights, tax penalties, and fines. That's why courts and tribunals don't simply accept the label in the written contract – they look at the reality of the working relationship using established legal tests.        

The three classic tests most commonly referenced are:1. The Control Test2. The Integration (or Organisation) Test3. The Economic Reality (or "Business on Own Account") Test
How Courts Actually Decide

In practice, no single test is decisive. Modern courts (especially in the UK post cases like Uber BV v Aslam and Pimlico Plumbers) use a multifactor approach, weighing all relevant factors to reflect the true "economic reality" of the relationship. Written contracts are considered, but they are not conclusive – courts look behind the label.  

Visualising the Tests in ActionTo make this clearer, here's a practical example using three hypothetical workers in a tech company:

• Alex – Full-time developer: high control, fully integrated, no financial risk → clearly an employee.
• Sam – Freelance designer: low control, not integrated, multiple clients and own equipment → clearly a contractor.
• Jordan – Consultant: mixed indicators → ambiguous (may fall into the intermediate "worker" category with some rights).

The dashboard below applies the three tests and visualises the results:

Final Thought

Getting this classification right from the start saves headaches later. If you're an employer engaging freelancers or contractors, consider running your arrangements through these three lenses – or seek specialist advice when the picture is unclear.


Python code by Grok

import plotly.graph_objects as go
from plotly.subplots import make_subplots

# Data for three example workers
workers = {
    "Alex (Full-time Developer)": {"control": 4, "integration": 3, "independence": 0},
    "Sam (Freelance Designer)":   {"control": 1, "integration": 1, "independence": 5},
    "Jordan (Consultant)":        {"control": 2, "integration": 2, "independence": 3}
}

typical_employee = {"control": 4, "integration": 3, "independence": 0}
typical_contractor = {"control": 1, "integration": 1, "independence": 5}

def get_radar_values(data):
    return [
        data["control"] * 2.5,
        data["integration"] * 3.33,
        data["independence"] * 2,
        data["independence"] * 2,
        data["independence"] * 2
    ]

categories = ['Control', 'Integration', 'Financial Independence', 'Own Equipment & Risk', 'Multiple Clients']
theta_closed = categories + [categories[0]]

fig = make_subplots(
    rows=1, cols=2,
    subplot_titles=("Radar Chart: Employment Tests Comparison", "Likelihood of Employee Status"),
    specs=[[{"type": "polar"}, {"type": "bar"}]],
    horizontal_spacing=0.15
)

# Typical profiles
emp_vals = get_radar_values(typical_employee) + [get_radar_values(typical_employee)[0]]
cont_vals = get_radar_values(typical_contractor) + [get_radar_values(typical_contractor)[0]]

fig.add_trace(go.Scatterpolar(r=emp_vals, theta=theta_closed, fill='toself',
                              fillcolor='lightgreen', opacity=0.3, line_color='green',
                              name='Typical Employee'), row=1, col=1)
fig.add_trace(go.Scatterpolar(r=cont_vals, theta=theta_closed, fill='toself',
                              fillcolor='lightcoral', opacity=0.3, line_color='red',
                              name='Typical Contractor'), row=1, col=1)

# Workers
colors = ['#4CAF50', '#2196F3', '#FF9800']
for i, (name, data) in enumerate(workers.items()):
    vals = get_radar_values(data) + [get_radar_values(data)[0]]
    fig.add_trace(go.Scatterpolar(r=vals, theta=theta_closed, fill='toself',
                                  name=name, fillcolor=colors[i], opacity=0.6,
                                  line_color=colors[i]), row=1, col=1)

# Bar chart
classifications = []
probs = []
for name, data in workers.items():
    emp_score = (data["control"] + data["integration"]) / 7 * 100
    cont_score = data["independence"] / 5 * 100
    total = emp_score + cont_score
    emp_prob = emp_score / total * 100 if total > 0 else 50
    probs.append(emp_prob)
    classifications.append(name)

fig.add_trace(go.Bar(x=classifications, y=probs, marker_color=colors,
                     text=[f"{p:.0f}%" for p in probs], textposition='outside'), row=1, col=2)

fig.update_layout(title="<b>Contract of Service vs Contract for Services</b><br>Visualising the Three Tests",
                  height=700, showlegend=True, margin=dict(t=100))
fig.update_polars(radialaxis=dict(range=[0,10]))
fig.update_yaxes(title_text="Likelihood of Employee Classification (%)", row=1, col=2, range=[0,100])

fig.show()