The cases against Uber and Pimlico Plumbers are moving steadily through the Court system.  These cases concern the employment status of those delivering work for the organisations cited.  Importantly those cases bring to the fore the current vogue for using ‘self employed’ staff rather than actually employing someone.  But there are clear distinctions between employment status and self employed status and no one is more interested than HMRC.

A self employed contractor is not bound by your rules, policies and procedures other than in respect of health & safety and discrimination.  They do not work under your direct supervision and can send an appropriately qualified/experienced subcontractors or a substitute to do the work.  They are not obliged to keep to your designated ‘office hours’ and can take time out as and when they like.  They use their own equipment and are responsible for the maintenance of that equipment.  The self employed contractor manages their own tax and national insurance and has no right to holiday pay, sickness pay and cannot claim unfair dismissal.

It is easy to see why organisations resort to self employed contractors as there are advantages on both the employment rights front and the requirement to pay the employers’ share of tax and national insurance.   There are also tax advantages for the self employed who can claim against tax for their travel expenses to and from their place of work and for a range of other things such as stationery and equipment.

But if you anticipate the individual doing the work personally; if you anticipate them complying with your organisational norms such as being in the workplace from 9 – 5 every or most days;  if they use your equipment and work under your supervision then they may not be truly self employed.

Should HMRC identify a situation whereby someone is actually an employee despite the individual submitting invoices to you then both they and the organisation become liable for unpaid tax and national insurance and the individual may also be able to show that they are owed payment for statutory annual leave.

HMRC has a useful tool to help you assess whether or not an individual is self employed or an employee for PAYE purposes. https://www.gov.uk/guidance/check-employment-status-for-tax

It really is worthwhile spending a few minutes checking the employment status of anyone who is doing work for you and is not already on your payroll.

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