Last reviewed: 5 October 2026. This guide is general information, not legal advice. It describes the rules in Great Britain (England, Wales and Scotland); Northern Ireland has its own employment law, and some rights differ there.
TL;DR
- GOV.UK lists five contract types: full-time and part-time, fixed-term, agency staff, freelancers, consultants and contractors, and zero-hours (GOV.UK).
- The label on the contract matters less than employment status: employee, worker or self-employed. Status decides the rights (GOV.UK).
- Fixed-term employees must be treated like permanent staff and become permanent after four years of successive contracts, unless the employer can justify otherwise (GOV.UK).
- Agency workers get equal treatment after 12 weeks in the same role.
- Contractors can be self-employed, work through their own company or be employed by an umbrella company: their tax status is a separate question (IR35).
Start with employment status, not the contract title
UK employment law does not have a fixed menu of contracts like some other countries. It has statuses, and the rights follow the status. GOV.UK lists the main ones as worker, employee, self-employed and contractor, director and office holder, and reminds employers that "Courts and tribunals can make final decisions on employment status" (GOV.UK, employment status).
| Status | Who it describes | Key rights |
|---|---|---|
| Employee | Works under an employment contract; required to work regularly, under a manager's control, cannot send a substitute | All worker rights, plus unfair dismissal protection, statutory redundancy pay, minimum notice, family leave and pay, the right to request flexible working |
| Worker | Has a contract to do work personally for a reward, with only a limited right to subcontract, and is not running their own business for a client | National Minimum Wage, paid holiday, rest breaks, the 48-hour week (with an opt-out), protection against discrimination and unlawful deductions |
| Self-employed | Runs their own business and takes responsibility for its success or failure | Health and safety protection, protection against discrimination in some cases, and the terms of their contract with the client |
"All employees are workers", GOV.UK notes, but not all workers are employees. A person can also have one status in employment law and another for tax: an employer has to work out both.
Permanent contracts: full-time and part-time
A "permanent" contract is simply an employment contract with no end date. Whether full-time or part-time, the employer must give the employee, among other things, a written statement of employment, the statutory minimum paid holiday and rest breaks, a payslip, Statutory Sick Pay and family leave and pay, and must pay at least the minimum wage (GOV.UK). Part-time staff must not be treated less favourably because they work part-time.
The contract does not have to be written down: GOV.UK notes that a contract exists as soon as someone accepts a job offer. What must be written is the written statement of employment particulars, due on day one; see our guide to the written statement of employment particulars. Many employers start with a probation period, which no law requires: see probation periods in the UK.
Fixed-term contracts
An employee is on a fixed-term contract if their contract ends on a particular date or on completion of a specific task, such as a project or maternity cover (GOV.UK). People supplied by an agency, apprentices and students on work experience do not count as fixed-term employees.
The rules that matter in practice:
- Equal treatment. Fixed-term employees must get the same pay and conditions, the same or an equivalent benefits package, and information about permanent vacancies, unless the employer can objectively justify a difference (GOV.UK).
- Four-year limit. "Any employee on fixed-term contracts for 4 or more years will automatically become a permanent employee, unless the employer can show there is a good business reason not to do so." A collective agreement can change this (GOV.UK).
- Non-renewal is a dismissal. Not renewing a fixed-term contract counts as a dismissal. Today, an employee needs two years' service to claim unfair dismissal; for dismissals from 1 January 2027 this drops to six months in Great Britain under the Employment Rights Act 2025 (see our Employment Rights Act 2025 timeline).
- Working past the end date without a formal renewal implies the end date has changed, and notice is then needed to end the contract.
Zero-hours contracts
GOV.UK describes zero-hours contracts as casual contracts, usually for "piece work" or "on call" work: the person is on call, the employer does not have to offer work and the person does not have to accept it (GOV.UK).
- Zero-hours workers are entitled to statutory annual leave and the National Minimum Wage like other workers.
- Exclusivity clauses do not bind them: the law lets them ignore a clause banning them from looking for work or accepting work from another employer.
- The Employment Rights Act 2025 creates a right to guaranteed hours and to reasonable notice of shifts. The government lists it for 2027, with "timings [to] be updated after consultation" (timeline update, 25 September 2026). Nothing changes for now.
Agency workers
An agency worker is supplied by an agency to work temporarily under a client's supervision. The client (the "hirer") pays the agency, and GOV.UK sets out the split of responsibilities (GOV.UK):
- the agency makes sure workers get their working time rights;
- from the first day, the hirer must give access to shared facilities, such as a canteen or childcare, and information about job vacancies;
- after 12 weeks' continuous employment in the same role, agency workers get the same basic terms as permanent staff, including pay, working time, rest periods, night work, breaks and annual leave;
- the hirer remains responsible for their health and safety.
Before finding them work, an employment business must also give each new agency worker a Key Information Document and written terms. The detail is in agency workers in the UK: the AWR 12-week rule and the Key Information Document.
Freelancers, consultants and contractors
When a business hires a freelancer, consultant or contractor, GOV.UK says they "are self-employed or are part of other companies", they often handle their own tax and National Insurance, and they "might not be entitled to the same rights as workers" (GOV.UK).
For recruitment agencies, "contractor" covers three quite different set-ups:
| Set-up | Who employs the contractor | Key rules |
|---|---|---|
| Own limited company (PSC) | Their own company, usually as its director; the company invoices | The off-payroll working rules (IR35) decide whether tax is deducted; see IR35 for recruitment agencies |
| Umbrella company | The umbrella, as its employee | PAYE through the umbrella; since 6 April 2026 the agency can be liable for an umbrella's PAYE shortfall; see umbrella company PAYE rules |
| Sole trader | Nobody: self-employed | Status must match how the work is really done; employment law and tax law each assess it separately |
GOV.UK warns that individuals and their employers "may have to pay unpaid tax and penalties, or lose entitlement to benefits, if their employment status is wrong" (GOV.UK).
Choosing the right arrangement: a quick guide
- Ongoing role, integrated in the team → permanent employment contract, with a written statement on day one.
- Defined project or cover → fixed-term contract, with equal treatment and the four-year rule in mind.
- Irregular, on-call work → zero-hours or casual arrangement, without exclusivity.
- Temporary cover through a third party → agency worker supplied by an employment business.
- Specialist work, run as a business → contractor, with status and IR35 checked for each engagement.
Where Marvin fits
Marvin handles both sides of a recruitment agency. For perm roles, Desk tracks candidates, shortlists and placements, and Cash drafts the placement fee invoice. For contract roles, each assignment in People holds the client, the dates and the day rates; contractors fill in monthly timesheets in days and half-days, the client signs them from a secure link without an account, and Cash drafts the client invoice at the day rate. The whole loop is described in contract and temp recruitment software.
Marvin does not decide employment status or IR35 status, run PAYE or RTI payroll, or record hourly timesheets, which makes it a better fit for day-rate contractors than for hourly temps. Those stay with your advisers and your payroll or umbrella provider.
Placing contractors on a day rate? Book a demo and we will walk through one of your assignments.
Frequently asked questions
What are the main types of employment contract in the UK?
GOV.UK lists full-time and part-time contracts, fixed-term contracts, agency staff, freelancers, consultants and contractors, and zero-hours contracts. The rights attached to each depend on the person's employment status: employee, worker or self-employed.
What is the difference between an employee and a worker?
All employees are workers, but employees have extra rights, such as protection against unfair dismissal, statutory redundancy pay, minimum notice and the right to request flexible working. Workers have core rights such as the National Minimum Wage, paid holiday, rest breaks and protection against discrimination.
When does a fixed-term employee become permanent?
An employee on successive fixed-term contracts for four years or more automatically becomes a permanent employee, unless the employer can show a good business reason not to, or a collective agreement removes that right.
Can a zero-hours contract stop someone working elsewhere?
No. The law allows a zero-hours worker to ignore a clause that bans them from looking for work or accepting work from another employer. Zero-hours workers are entitled to the National Minimum Wage and statutory annual leave.
Is a contractor the same as a self-employed person?
Not always. A contractor may be genuinely self-employed, work through their own limited company, or be paid through an umbrella company as its employee. Employment status and tax status are assessed separately, which is why IR35 exists.
