What is employment Status? - Work Status Meaning & Importance

When you grow as an adult, you will often find people interested in knowing your employment status. While people will look down on the unemployed, they will appreciate employed individuals. The appreciation is better and bigger based on the prosperity of your work status and income.

So, let’s dive in to understand everything about employment or worker status in this detailed blog.

Why is it important to understand the term “employment status”?

Most people don’t know what to say when someone asks about their employment status. Also, it will help you understand your rights as an employee. When an employer hires you for a specific role, he gets to frame your rights and protections. However, you have an equal say in deciding whether or not you are happy and want to accept the employment status your potential employer offered you.

So, what is “employment status”?

Employment status meaning: Employment status conveys worker status, whether employed or unemployed. And, if employed, what is the nature of work, designation, and income? In simple terms, it indicates your current status as a working individual.

Types of employment status

When you graduate, you often start looking to earn and become financially independent. And sometimes even after completing high school. Whatever you do to start earning gives you employment status. So, let’s look at all possible employment statuses briefly to help you understand and determine your employment status:

1. Intern (Unpaid or stipend): Usually, undergraduates are eligible to start working from the final year. Companies offer internships and hire fresh graduates and final year students to work as an intern. The association can be both paid or unpaid. The payment you receive as an intern is called stipend.

2. Employee (Salaried worker): Salaried people make up most of the working class in any nation. They are called white-collar workers and generally receive compensation monthly. Often, after completing training or internship, you are eligible to become a salaried employee of the company.

3. Independent Contractor: An independent contractor is employed to complete a project independently with little or no involvement from an employer. The payment is based on projects, and there is the freedom to choose how to get the work done.

4. Wage Worker: Contractors often employ laborers to do jobs and are paid weekly. The payment is called wage; thus, the employment status is “Wage Worker.”

5. Day Worker: Day workers are employed daily and paid at the day’s end. The payment is calculated strictly based on the hours of work done.

6. Freelancer: Mostly, people who prefer flexible working hours work as freelancers. They work independently with companies in their free hours and deliver work agreed upon by both parties, the freelancer and the employer.

7. Self-employed: People who choose to be their own boss undertake small businesses that they can take care of independently, with little or no support. It can be owning a small store or working as a consultant, offering individual services based on self-expertise.

8. Entrepreneur: Often, highly motivated individuals opt for entrepreneurship as their career. After all, starting a new business, generating a profit, and scaling it is no easy job. As an entrepreneur, you will hold an executive position in your company and often be regarded as a founder and play the roles of CEO, COO, or CMO, leading the entire team towards a common goal.

Factors That Determine Employment Status

1. Control over Work: Your control over work is an essential determinant of your employment status. While you will have little or no control as an employee or a trainee, you will enjoy greater freedom and control over your jobs when you are self-employed or work as a freelancer or contractor.

2. Financial Relationship: It is another important factor that matters in determining your worker status. The financial relationship of salaried employees with their employees is way different than with contractors, freelancers, and wage workers. Salaried employees enjoy many benefits compared to the rest of the parties apart from regular salaries, including health insurance, reimbursements, allowances, stocks, and much more.

3. Relationship between Parties: Unlike independent contractors and freelancers, employees are often emotionally connected with their organization and employer. Thus, there is a much better understanding and consideration. However, they are also expected to be a little more responsible and take ownership of their jobs.

4. Nature of the Work: It is another important determinant of employment status. Based on the nature of work, workers are categorized as white-collar, blue, and gray-collar workers. Blue-collar jobs are considered lower employment status as they get their hands dirty and are involved in work that needs manual labor. On the other hand, white and gray-collar jobs are of higher employment status, where you work behind a desk. The jobs are sophisticated and require mental labor.

A reputed job and consistent employment are essential to ensure that you have a healthy economic and social life. People struggle throughout to establish and maintain a decent employment status. Hence, you must know all kinds of employment statuses, the respective nature of work, and other factors to decide what suits you.